The research branch of Group of the Islamic Development Bank of Saudi Arabia (Group of the Islamic Development Bank in Saudi Arabia) sets out to develop an intelligent credit management system based on blockchain.
To do it The bank’s Islamic Research and Training Institute (IRTI) has partnered with Blocko, the blockchain provider that Samsung supports. The association is part of E24P, the regional consortium that Blocko launched in April in the Middle East, Africa and Southeast Asia.
Reduction of technical and economic problems
Dr. Sami Al Suwailem, CEO of IRTI, says the Islamic finance industry is expected to grow from $ 2 trillion to $ 3.78 trillion by 2022 There are various technical and economic challenges that “prevent the industry from really thriving”..
In contrast to traditional financial organizations Islamic banks do not charge interest on loans and do not punish offenders. Instead, they charge a late fee that is said to be donated to charity.
However, this approach is not without problems because eliminates the urge of borrowers to repay their loans. In addition, these banks are also facing Difficulties in efficiently distributing arrears to charity.
It is expected that the intelligent credit management system develop the E24P and IRTI, which will be based on the Aergo hybrid block chain, Establish an incentive mechanism that promotes timely repayment. It will also help automatically Installment to insurance funds to cover the defaults.
A more open, secure and transparent credit system
It is said that the The blockchain credit system helps both Islamic banks and other financial institutions to conduct credit assessments more securely and transparently without compromising the privacy of the parties involved. Phil Zamani, CEO of E24P, said the system will help banks “offer a truly unique solution that has the potential to have a significant impact on the world of Islamic finance”.
You can further reduce costs and operational difficulties by including financing functionsthat would otherwise be restricted, e.g. B. Credit information, creditworthiness, creditworthiness and credit insurance.
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