Specialists- positive banking may contribute in solving the problem of excess money experienced by banks

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Specialists- positive banking may contribute in solving the problem of excess money   experienced by banks

      During a workshop organized by the East chamber on Thursday
Specialists- positive banking may contribute in solving the problem of excess money   experienced by banks
 Riad Al-Rabiah, Executive vicar of the Saudi steel pipe company stressed that the positive banking idea is considered an innovative approach in the financial and banking transactions, and is currently being applied  partly in some conventional banks in the Kingdom.
Rabiah Said during a workshop entitled (the current economic situation - Banking positivity) organized by the East  chamber Thursday, February 18, 2016 in the presence of member of  the administrative Board Najib bin Abdullah Al Sehata and was led by the head of the Industrial Committee in the  chamber Abdullah  Al Sanea that the idea is based on the principle of non-dealing with benefit whether taking or giving, as it is independent of conventional banking and Islamic banking, and this clearly shown in the source of the positive banking returns, which is always  by the   depositors, unlike the source of traditional banking returns, which is by borrowers, also unlike  the source of Islamic banking return, which is by the funding applicants often with the exception of Islamic banks as partners with the depositors.
He said during the workshop, which was attended by Musa Al Musa banking an expert at the head office of the main  chamber that banking positivity  is summed up   to the fact that  if the bank will lend a loan with an interest rate of 6% and distributed between 4% commission to the bank and 2%  as an annual return for the applicant, hence it will pay a deposit for a year, and will pay a Bank commission,  on condition  that it lends its chosen clients without interest after studying their financial qualification, and that if the Bank lends them without benefits for three months, for example, it will make the customer  purchase his goods with  this deposit four times a year, and if the average profit of sales is 5%, it will bring annual profit rate of 20%, where the bank will give 4% commission, and will keep a 16% to itself.
Rabiah explained that banks apply the idea under the label of special facilities until named positive banking, after drawn from a source of banks' return and that is in terms of the depositor  balance  .
Also he pointed that the positive banking may significantly contribute to solving the problem of excess money experienced by the banks, because with the positive banking, any deposit received by the bank then lends and as a result to this the money will recycle not pile up.
Al-Rabiah said that the annual commission of the bank will be paid divided  with a percentage of 1% of sales at the beginning of every three months, instead of giving a single payment of 4% at the end of the year, indicating that the goals achieved by this method of payment; is the linking of commission with sales, and this what leads to higher commission with sales rise, and  detaching  the link between commission and the deposit and  thus  the bank will not get a commission if  merchant did not sell, and detaching  of the link between commission and duration which increases the bank's interest in raising depositors sales because it will raise its commission, as the detaching  allows by  linking commission with the deposit  to free purchase  and non-compliance with the goods of depositor only.
Regarding the required documents Rabiah said that the positive banking is no different from conventional banking in terms of the usual procedures in the granting of loans.
And about  the risk Rabiah  said  that the possibility of business depositors sharing with the bank's  the risks of  borrowers clients, explained that through a schedule of the increase of the participation rate of depositors at risk with the bank from 0% to 50%  as their customers credit rate is decreasing , which is set by the bank of the highest grade rating (AAA) to a lower rating (B), and pointed  that the risks to the bank's depositors and the positive banking are less than traditional banking, also pointed that the spread of positive banking application will draw attention towards negotiating  commission rate and the rate of participation in the risk.
And about the procedures followed in the positive banking  for the  payment delinquent
he explained that the procedures would be similar to conventional procedures of banks, with only a difference which is there is no impose of  interest  and delay penalties, pointing that the positive bank did not face any case of payment delinquent since its start.