The collaboration has happened as a portion of the E24P regional association rolled out by Blocko throughout Africa, Middle East and South East Asia in April.
Pointing to the assessment that Islamic finance sector is forecast to record growth to $3.78 trillion, from $2 trillion by 2022, Dr. Sami Al Suwailem, director general of IRTI stated that there are several technical and economic issues that “prevent the industry from truly flourishing.”
Contrary to conventional financial institutions, Islamic banks do not levy interest on loans or slap penalty on loan defaulters. They usually include a late fee that is supposedly given to charity.
Nevertheless, this strategy has issues as it does create a lethargic attitude among borrowers in paying back their loans. Furthermore, banks and financial institutions also face trouble in disbursing the late fees to charity.
The smart credit handling system being built by E24P and IRTI, which will run on Aergo hybrid blockchain, is anticipated to unveil an incentive program in place, promoting on time repayments.
It will also mechanize the transfer of funds to insurance pools that covers non-payment of loans.
The blockchain credit tool is stated to assist both Islamic banks and other financial organizations carry out credit validation in a more safe and transparent method, without yielding on the privacy of the participants.
The CEO of E24P Phil Zamani stated that they platform will assist banks “deliver a truly unique solution that has the potential to have a significant impact on the world of Islamic finance.”
It may additionally minimize the expenses and finance related operational problems such as credit rating, credit reporting, credit insurance and credit history.