Bahrain-based BMI Bank said it has reached an agreement with Kingdom's labour fund Tamkeen for a BD10 million ($26.5 million) contribution to help boost its Sharia-compliant financing for local private sector enterprises.

The joint scheme offers a suite of Sharia-compliant financial products under the umbrella of the Islamic banking division within BMI Bank. The new agreement will expand the total portfolio to BD30 million.

As part of the agreement, Tamkeen will guarantee 50 per cent of the total financing amount as well as subsidise half the profit payments due from customers.

Through this financing scheme, enterprises within the private sector are eligible to receive financing ranging from BD10,000 to BD500,000 to help design a higher growth trajectory for their companies.

The scheme offers a range of trade finance products such as letters of credit and guarantee, Murabaha financing, which covers working capital, machinery and equipment financing as well as Ijara financing at a subsidised profit rate of 4 per cent per annum on reducing balance with an option of a longer repayment period of up to 10 years.

'As a locally responsible bank, we are honoured to further extend our fruitful relationship with our partner Tamkeen by entering the third phase of the scheme,' said bank chief executive Jamal Al Hazeem.

'We are continuing with our mission to support the private sector and put enterprises on the fast-track towards success,' said Tamkeen's enterprise and human capital development vice-president Dr Ahmed Abdulghani Al Shaikh.

'This agreement will continue to bridge the finance gap for many Bahraini enterprises that require the necessary funding for various operational activities.'

Eligibility criteria for applicants are similar to other Tamkeen schemes.

Small- and medium-sized enterprises (SMEs) must be located in Bahrain but Bahraini ownership is not mandatory.

Bahrainisation levels should be maintained as required by the Labour Market Regulatory Authority (LMRA) to which, all fees must be paid. The establishment has to be in business for at least two years.

It is designed to deliver funds to SMEs within 15 working days of receiving application.

It allows entrepreneurs flexible repayment with exemption of all future profits in case of early settlement of the full financing amount.-TradeArabia News Service