Product Design
Form
|
_______________________________________________________
|
|
Product / Brand Name:
|
XYZ Personal Finance
|
|
Date:
|
10.02.20##
|
|
Version :
|
2
|
Nature
of the Request:
1 New Product
Program
þRevision of
Existing Product Program (Permanent Changes)
(Please provide brief summary of proposed changes)
1 Special Campaign
(Temporary Changes)
(Please provide brief summary of proposed
changes)
Purpose,
Conceptual Design and Structure:
XYZ Personal Finance product has been revised
to cater for consumer personal financing needs and also for making the public
to be aware of our activities in this business. This product will be re-launched
through a XYZ Personal Finance Advertisement Campaign.
Effective
Date / Launching Date:
· From 24th
of February 20## to 01st of May 20##.
· Special pricing
will be valid until 01st of May 20##. After the campaign, existing
pricing which is shown in Appendix-1 will be automatically applied.
· This Product
Program shall be reviewed on annual basis by Retail Banking Department and Risk
Management.
Financing
Modes:
Commodity Morabaha and Morabaha.
Target
Market:
The following customer segments will be
targeted:
·
Salaried individuals both Bahrainis and
Non-Bahrainis
·
Small Business owners.
· Retired People.
Eligibility
Criteria:
Applicant under
this Product Program provided must meet the following minimum criteria:
1)
Is
of a legal age as defined by the Laws of the Kingdom of Bahrain
provided the Applicant’s age plus the repayment period does not exceed his/her
retirement age. Retirement age is
defined as follows:
|
Sector
|
Male
|
Female
|
|
Government Ministries
|
60
|
55
|
|
Public Sector
|
60
|
55
|
|
Private Sector
|
60
|
55
|
|
Self Employed/ CR Owners
|
60
|
60
|
2)
Applicant
age will be minimum 21 years and maximum 60 years provided that the repayment
period will not be incompatible with the above table. The repayment period for
the retired people will not exceed the age of 65.
3)
Is
working and residing in the Kingdom
of Bahrain.
4)
Employment:
·
Salaried Individuals should be employed by an
approved employer in accordance with the “Approved Employers” guidelines /
matrix.
·
Self Employed and Small Business owners should be
true owners of their business not less than 3 years with business track record.
5)
Employment
period:
·
Salaried individuals: Has been in the employment of
the present employer for a period of not less than 3 months (provided the
Applicant has completed the required probation period).
·
Self employed: Must be active in their business not
less than 3 years with business track record.
·
Small Business owners: Must be active in their business
not less than 3 years with business track record.
6)
Minimum
income which is defined in Appendix-2 for different types of customers will be
as follows.
·
Salaried
individuals: Receives a minimum income not less than BD 200 per month. DSR will
not exceed the percentages depicted in Appendix-2.
·
Self employed people: Receives a monthly average
net credit turnover of at least BD 800 in the past 6 months and the monthly
installment per average net credit turnover of the last 6 months will not
exceed the percentages depicted in Apendix-2.
· Small Business owners: Receives a monthly average net credit turnover of at
least BD 1,000 in the past 6 months and the monthly
installment per average net credit turnover of the last 6 months will not
exceed the percentages depicted in Apendix-2.
· Retired
individuals: Receives a minimum income of BD 350. DSR will not exceed the
percentages depicted in Appendix-2.
7)
Is
not adversely mentioned on Central Bank of Bahrain’s “Credit Risk Unit System”
or any other referral lists (internally or externally).
8)
Has
the legal capacity to enter into contracts and execute documents / agreements.
Applicants who
do not meet the above minimum Eligibility Criteria may apply for the facilities
against full tangible security which is a real estate property or cash
collateral. These collaterals have to be pledged to our bank until the end of
the finance. The type of security and the coverage (Value of security /
principal) ratios are depicted in the following table.
|
Type
of security
|
Coverage ratio
|
|
Real estate
|
120%
|
|
Cash
Collateral
|
110%
|
Financing
Amounts:
1)
The
Facilities will be granted only in local currency of the Kingdom of Bahrain,
Bahraini Dinars.
2)
Applicants
may ask finance for amounts:
· Salaried
Bahrainis: Between BD 1,000 and BD 100,000.
· Salaried
Expatriates: Between BD 1,000 and BD 25,000 (or 80% of their indemnity)
· Self employed
individuals: Between BD 1,000 and BD 25,000.
· Small business
owners: Between BD 1,000 and BD 10,000
· Retired People:
Between BD 1,000 and BD 10,000.
3)
Where
an Applicant enjoys other credit facilities with the Bank, the maximum amount
per individual personal finance facility plus all other credit facilities (such
as Cards, other consumer finance facilities, or any other commercial financing)
should not exceed maximum limits permissible by the Central Bank or the Bank’s
internal Single Obligor policies (whichever is lower).
Pricing:
Normal Profit Rate : As
per the matrix
|
Customer Type
|
Salaried Bahraini
|
Salaried Expat
|
Self Employed
|
CR Owner
|
Retiree
|
|
Maximum Tenor
|
84
|
84
|
60
|
60
|
60
|
|
Minimum Finance -
BD
|
1,000
|
1,000
|
1,000
|
1,000
|
1,000
|
|
Maximum Finance –
BD
|
100,000
|
25,000 or 80% of
the indemnity[2]
|
25,000
|
10,000
|
10,000
|
|
Minimum Salary - BD
|
200
|
200
|
800
|
1,000
|
350
|
|
Salary Transfer
|
Mandatory
|
Mandatory
|
N/A
|
N/A
|
Mandatory
|
|
Life Insurance
|
Mandatory
|
Mandatory
|
Mandatory
|
Mandatory
|
Mandatory
|
|
Life Takaful
Arrangement Fee
|
BD 1
|
BD 1
|
BD 1
|
BD 1
|
BD 1
|
|
Checks
|
Security checks
|
Security checks
|
Post dated
|
Post dated
|
Security checks
|
|
Administration Fee
|
BD 100
|
BD 120
|
BD 150
|
BD 150
|
BD 120
|
|
Installment Fee
|
BD 1
|
BD 1
|
BD 1
|
BD 1
|
BD 1
|
|
Grace Period
(tenor > 24
months)
|
Max 3 months
|
Max 3 months
|
Max 3 months
|
Max 3 months
|
Max 3 months
|
|
Pricing*
| |||||
|
0-12 months
|
3.99%
|
4.09%
|
4.09%
|
4.09%
|
4.09%
|
|
13-48 months
|
4.19%
|
4.29%
|
4.29%
|
4.29%
|
4.29%
|
|
49-60 months
|
4.49%
|
4.59%
|
4.59%
|
4.59%
|
4.59%
|
|
61-84 months
|
4.49%
|
4.59%
|
-
|
-
|
-
|
|
Grace Period (3
months)
|
4.69%
|
4.79%
|
4.79%
|
4.79%
|
4.79%
|
* General Manager
of Commercial Banking will have the right to increase the pricing of the
product at any time after the campaign.
Financing
Tenor:
Grace
Period : Maximum of 3 months (Optional for
the customer subject to the credit assessment)
Repayment Period : Maximum
repayment period of 84 months inclusive of Grace Period subject to the pricing
matrix.
Payment Holidays : Not allowed.
Administration Fees : Administration
fees (as shown in the above matrix) will be deducted from the customer account
upfront and will not be financed. There will be installment fees of BD 1 that
will be collected on the due date of the installments.
Penal Rate :
If any of the monthly payment(s)
under the Facility is (are) not paid on the due date(s), a maximum penal rate
of 0.5% flat per day to be charged on defaulted installment (each individually)
from the due date(s) until the date(s) of payment.
All
penalties collected must be credited to charity accounts after deducting costs
and expenses associated with collecting the defaults (Sharia to decide on
percentage that Bank may retain).
Prepayment Fees : To remain
compliant with the rulings of our Sharia Board, prepayments under this product shall
not be subject to any specific “Prepayment Fees”. HORB, however, may deduct reasonable amounts
from profits refundable to the Applicants in case of full prepayment
(Non-accrued amounts – this deduction may also include the life insurance).
Life Takaful Fee : We charge BD 1 for Life Takaful Insurance
Arrangement to the customer due to the service given for arranging Life Takaful
through Solidarity.
Life-Takaful
(Insurance) Premium:
Life Takaful which
is mandatory in all transactions will be made through Solidarity with a rate of
0.2375 per mille and the customer will be charged 0.350 per mille. If
Solidarity applies different pricing scheme for the individuals out of the
scope the same profit margin will be kept.
Security
/ Support:
The securities in
this financing scheme are listed in the following:
- In all cases salary transfer will be mandatory
- In all cases the life insurance will be mandatory
- In all cases the security checks will be mandatory from salaried individuals and retirees.
- Post dated checks (from CR owners and SE people)
- Personal guarantee from CR owners and SE people is mandatory.
- If the customer obtains finance against his/her time deposit, there is no need for salary transfer and life insurance. Nevertheless, if the customer obtains finance against his/her real estate there is a need for life insurance, fire insurance and salary transfer.
Documentations and
Agreements:
- Salaried Bahraini
- Copy of CPR
- Last Salary slip (If overtime is required for better DSR last three salary slips)
- CRB consent form.
Additional Mandate
Documents
- 3 months bank statement (If there is additional fixed income, i.e. rent income)
- Salary certificate or 3 months salary slip (If the joining date is not mentioned in the last salary slip or title of the employee is not clearly stated in CPR / salary slip)
- If joining date is mentioned in salary slips but title is not mentioned, salary certificate is required
- Salaried Expatriate
Mandate documents
- Copy CPR and Passport for Non-Bahrainis (with Visa work permit)
- Last Salary slip (If overtime is required for better DSR last three salary slips)
- CRB consent form.
Additional Mandate
Documents
- 3 months bank statement (If there is additional fixed income, i.e. rent income)
- Salary certificate or 3 months salary slip (If the joining date is not mentioned in the last salary slip or title of the employee is not clearly stated in CPR / salary slip)
- If joining date is mentioned in salary slips but title is not mentioned, salary certificate is required
- Self Employed and Small Business
Mandate documents
- Copy CPR for Bahrainis
- Copy CPR and Passport for Non-Bahrainis (with Visa work permit)
- 6 months bank statement
- Copy of Commercial registration document.
- CRB consent form.
- Retired people
Mandate documents
- Copy CPR for Bahrainis
- Salary Certificate from GOSI or pension fund
- Salary slip if they are working officially in an organization
- CRB consent form.
Additional Mandate
Documents
- 3 months bank statement (If there is additional fixed income, i.e. rent income)
- Salary certificate or last 3 months salary slip for the current organization (if joining date is not mentioned in the last salary slip)
Facility Documents : - Application Form
- Morabaha Agreement
Security Documents :
- Security checks
- Salary Transfer Letter
- Post dated checks
(from CR owners and SE people)
Media
Channels:
We
are expecting an average of BD 40,000 as advertising cost. The channels will be
decided after the advertisement agency recommendations.
Source
of Funding:
All
transactions will be funded by the General Modaraba.
Appendices:
- Appendix 1 :
Existing pricing
- Appendix 2 :
Income Assessment
- Appendix 3 : Max
tenor / min salary / max limit / grace period
- Appendix 4 : Pricing
and the fees of the banks
- Appendix 5 : Security structure and specific finances
- Appendix 6 : Profitability
APPROVALS
|
|
|
|
|
Mgr – Retail
Banking
|
|
Senior Manager –
Retail Banking
|
|
|
|
|
|
|
|
Head – Risk
Management
|
|
Sharia
Compliance
|
|
Legal Advisor
|
|
|
|
|
General Manager
Com. Bnk.
|
General Manager
Support
|
|
|
|
CEO
|
APPENDIX – 1:
EXISTING PRICING
|
Facility Type
|
Morabaha and
Commodity Morabaha
| |||
|
Customer Type
|
Bahraini
|
Expatriates / Self
Employed
| ||
|
Pricing
New Existing
New
Existing
| ||||
|
0-12 months
|
4.55%
|
4.39%
|
4.85%
|
4.49%
|
|
13-48 months
|
4.55%
|
4.49%
|
4.85%
|
4.79%
|
|
49-60 months
|
4.75%
|
4.75%
|
4.99%
|
4.99%
|
|
61-84 months
|
4.75%
|
4.75%
|
n/a
|
n/a
|
|
Grace Period (max. 3 months)
|
4.99%
|
4.99%
|
5.29%
|
5.29%
|
INCOME
ASSESSMENT CRITERIA FOR RETAIL BANKING CUSTOMERS
1.
SALARIED BAHRAINIS
"Income"
is calculated according to the following formula:
+
Basic income
+ Fixed Allowances
+ Fixed percentage of his last 3 months average overtime
earning (depending on the company)
If he has other income
+ 50% of his rent income
+
25% of his other steady income
The
sum of installment and other obligations will not be higher than the basic
salary.
The
minimum DSR values for Salaried Bahrainis
|
Income
– BD
|
XYZ
Personal Fin.
|
XYZ
Car Fin.
|
XYZ
Home Fin.
|
|
0-200
|
No
finance
|
No
finance
|
No
finance
|
|
201-250
|
30%
|
30%
|
No
finance
|
|
251-350
|
50%
|
50%
|
No
finance
|
|
351-1,000
|
50%
|
50%
|
50%
|
|
1,001-3,000
|
50%
|
50%
|
65%
|
|
Above
3,000
|
65%
|
65%
|
70%
|
2.
SALARIED EXPATRIATES
"Income"
is calculated according to the same formula applied to Salaried Bahrainis:
The
minimum DSR values for Salaried Expatriates
|
Income
– BD
|
XYZ
Personal Fin.
|
XYZ
Car Fin.
|
XYZ
Home Fin.
|
|
0-200
|
No
finance
|
No
finance
|
No
finance
|
|
201-250
|
30%
|
30%
|
No
finance
|
|
251-500
|
50%
|
50%
|
No
finance
|
|
501-1,000
|
50%
|
50%
|
50%
|
|
1,001-3,000
|
50%
|
50%
|
65%
|
|
Above
3,000
|
65%
|
65%
|
70%
|
3.
SELF EMPLOYED INDIVIDUALS
Income
is the net average credit turnover of the last 6 months. The monthly
installment will not be higher than a percentage of the income which is
depicted in the following table.
The
minimum installment / income ratios for Self Employed Individuals
|
Income
– BD
|
XYZ
Personal Fin.
|
XYZ
Car Fin.
|
XYZ
Home Fin.
|
|
0-800
|
No
finance
|
No
finance
|
No
finance
|
|
801-1,000
|
40%
|
40%
|
No
finance
|
|
1,001-3,000
|
50%
|
50%
|
55%
|
|
Above
3,000
|
60%
|
60%
|
65%
|
4.
SMALL BUSINESS OWNERS
Income
is defined as same as the self employed people.
The
minimum installment / income ratios for Small Business Owners
|
Income
– BD
|
XYZ
Personal Fin.
|
XYZ
Car Fin.
|
XYZ
Home Fin.
|
|
0-1,000
|
No
finance
|
No
finance
|
No
finance
|
|
1,001-1,500
|
35%
|
35%
|
No
finance
|
|
1,501-3,500
|
40%
|
40%
|
50%
|
|
Above
3,500
|
50%
|
50%
|
60%
|
5.
RETIREES
"Income"
is calculated according to the following formula:
+
Pension
If working in an organization
+ Basic income
+ Fixed Allowances
+ Fixed percentage of his last 3 months average overtime
earning (depending on the company)
If he has other income
+ 50% of his rent income
+
25% of his other steady income
The
sum of installment and other obligations will not be higher than the basic
salary.
The
minimum DSR values for Retirees
|
Income
– BD
|
XYZ
Personal Fin.
|
XYZ
Car Fin.
|
XYZ
Home Fin.
|
|
0-350
|
No
finance
|
No
finance
|
No
finance
|
|
351-600
|
40%
|
40%
|
No
finance
|
|
601-2,000
|
45%
|
45%
|
55%
|
|
Above
2,000
|
50%
|
50%
|
60%
|
APPENDIX-3: MAX TENOR / MIN SALARY / MAX LIMIT / GRACE
PERIOD
|
BANK
|
MAX TENOR
|
MIN SALARY
|
MAX LIMIT
|
GRACE PERIOD
|
|
Bank-1
|
Sal.
Bahr 7 years
Sal.
Exp 7 years
SE
6 years
SB
6 years
Retired
No finance
|
Sal.
Bahr BD 200
Sal.
Exp BD 200
SE
ann. inc. BD 30K
Ann.Sales
150K
SB
ann. inc. BD 30K
Ann.Sales
150K
|
BD
150,000
|
No
|
|
Bank-2
|
Sal.
Bahr 7 years
Sal.
Exp 7 years
SE
Upon approval
SB
Upon approval
Retired
7 years
|
BD
200
|
BD
50,000
|
3
months
|
|
Bank-3
|
5
years
|
Sal.
Bahr BD 200
Sal.
Exp BD 250
SE
BD 1,000
SB
BD 1,000
Retired
BD 300
|
Depends
on the income.
|
No
|
|
Bank-4
|
7
years
|
BD
200
|
Depends
on income
|
2
months
|
|
Bank-5
|
7
years
No
retired finance
|
Sal.
Bahr BD 250
Sal.
Exp BD 300
SE
Varies
SB
Varies
Retired
No finance
|
Depends
on the income
|
No
|
|
Bank-6
|
7
years
|
Sal.
Bahr BD 200
Sal.
Exp BD 250
SE
BD 2,000
SB
BD 2,000
Retired
BD 200
|
Depends
on the income
|
No
|
|
Bank-7
|
7
years
|
Sal.
Bahr BD 200
Sal.
Exp BD 200
SE
BD 2,000
SB
BD 2,000
Retired
BD 200
|
Depends
on the income
|
No
|
|
Bank-8
|
7
years
|
Sal.
Bahr BD 250
Sal.
Exp BD 300
SE
Varies
SB
Varies
Retired
BD 250
|
Depends
on the income
|
No
|
|
Bank-9
|
7
years
|
Sal.
Bahr BD 250
Sal.
Exp BD 250
SE
Varies
SB
Varies
Retired
BD 250
|
Depends
on the income
|
No
|
|
Bank-10
|
7
years
|
No
Info
|
No
info
|
1
month
|
APPENDIX-4:
PRICING AND THE INSTALLMENTS
|
BANK
|
PRICING
|
Insurance rate
|
Bare Installment
|
Real Installment
|
|
Bank-1
|
Salaried
people
5.02
% flat
9.00%
reducing
SE,
SB
5.33
% flat
9.50%
reducing
|
0.45/1,000
|
161
And
163
|
165
And
167
|
|
Bank-2
|
All
customers
4.80%
flat
9%
reducing
|
0.19/1,000
|
161
|
163
|
|
Bank-3
|
All
customers
5.50%
flat
9.80%
reducing
|
Included
in the admin fee
|
|
217
|
|
Bank-4
|
Bahraini,
SE, SB
3.25%
flat
6.18%
reducing
Expatriates
4.50%
flat
8.13%
reducing
|
Others
0.85/1,000
Expatriates
0.60/1,000
|
146
And
157
|
155
And
163
|
|
Bank-5
|
All
customers
5.02
% flat
9.00%
reducing
|
0.4/1,000
|
161
|
165
|
|
Bank-6
|
4.53%
flat
8.50%
reducing
|
0.4/1,000
|
158
|
162
|
|
Bank-7
|
4.60%
flat
8.63%
reducing
|
0.34/1,000
|
157
|
161
|
|
Bank-8
|
5.33%
flat
9.50%
reducing
|
0.35/1,000
|
163
|
167
|
|
Bank-9
|
6.90
% flat
12.00%
reducing
|
0.25/1,000
|
177
|
181
|
|
Bank-10
|
5.37%
flat
10%
reducing
|
0.60/1,000
|
164
|
170
|
APPENDIX-5:
FEE AND SECURITY STRUCTURE
|
BANK
|
Admin Fee
|
SECURITY
|
|
Bank-1
|
Sal.
Bahr BD 55
Sal.
Exp BD 55
SE
BD 250
SB
BD 250
Retired
No finance
|
ST
|
|
Bank-2
|
Sal.
Bahr BD 70
Sal.
Exp BD 70
Retired
BD 70
|
ST
|
|
Bank-3
|
3%
|
|
|
Bank-4
|
Sal.
Bahr BD 550
Sal.
Exp BD 300
SE
BD 550
SB
BD 550
Retired
BD 550
|
ST
|
|
Bank-5
|
BD
50
|
ST
|
|
Bank-6
|
BD
80
|
ST
|
|
Bank-7
|
BD
60
|
ST
|
|
Bank-8
|
BD
100
|
ST
|
|
Bank-9
|
BD
200
|
ST
|
|
Bank-10
|
BD
210
|
Cheques,
notes, direct debit from A/C
|
|
Pricing
| |||||
|
|
Sal. Bhr.
|
Sal. Exp.
|
SE
|
SB
|
Retiree
|
|
0-12 months
|
3.99%
|
4.09%
|
4.09%
|
4.09%
|
4.09%
|
|
13-48 months
|
|
|
|
|
|
|
49-60 months
|
|
|
|
|
|
|
61-84 months
|
|
|
|
|
|
|
Grace Period (3
months)
|
|
|
|
|
|
|
APR’s*
| |||||
|
|
Sal. Bhr.
|
Sal. Exp.
|
SE
|
SB
|
Retiree
|
|
0-12 months
|
9.81%
|
10.43%
|
10.43%
|
10.43%
|
10.43%
|
|
13-48 months
|
|
|
|
|
|
|
49-60 months
|
|
|
|
|
|
|
61-84 months
|
|
|
|
|
|
|
Grace Period (3
months)
|
|
|
|
|
|
*APR contains Admin and installment fee but life insurance is not
factored
APPENDIX-6:
|
Incomes
|
Unit
|
Total
|
|
Profit
from funds
|
8.5% reducing
|
BHD 24,791
|
|
Admin
Fee
|
BHD 101
|
BHD 35,500
|
|
Installment
fee
|
BHD 1
|
BHD 350
|
|
Insurance
profit
|
0.1125/1,000
|
BHD 393
|
|
Total
|
|
BHD 61,034
|
|
|
|
|
|
Expenses
|
Unit
|
Total
|
|
Cost
of the deposits
|
2.93%
|
BHD 8,545
|
|
Advertisement
costs
|
BHD 20,000
|
BHD 20,000
|
|
Total
|
|
BHD 28,545
|
|
|
|
|
|
Profit
(Advert. Period)
|
|
BHD 32,489
|
The profitability of the XYZ Personal
Finance Campaign is shown in the above table. In order to create this table we
have used conservative figures. The assumptions are:
- The financing will be BD 10.000 on average.
- The tenure will be 60 months on average.
- The target is 350 transactions for 1 month
- Our admin fee will be BD 100 per transaction.
- Life takaful arrangement fee will be BD 1 per transaction.
- The installment fees will be BD 1.
- The insurance profit will be 0.350/1,000 – 0.2375/1,000 which is 0.1125 / 1,000
- We expect the advertisement cost will be BD 40,000 for two months.
- The cost of the deposits of retail banking is calculated regarding the following table.
|
In
Million USD[3]
|
Amount
|
Rate
|
|
Current Accounts
|
337
|
0%
|
|
Savings Accounts
|
114
|
0.75%
|
|
Mudaraba Accounts
|
704
|
4.45%
|
The average cost
of the deposits is estimated as 2.78%. After adding 5% reserve requirement we
have found a figure of 2.93%.
[1] Self
Employed people are the professionals such as accountants, doctors, architects,
lawyers etc. The professionals such as entertainers, actors, singers, sport
players etc. will not be covered with this product program
