Mar 30 , 2019
By BERHANE HAILEMARIAM ( FORTUNE STAFF WRITER )
Abay Bank has launched a service specifically designated for charities, the first of its kind in the country.
The Charities Savings Account Service was launched at the Intercontinental Addis Hotel in the presence of representatives from governmental and non-governmental donor organisations on March 19, 2019.
The savings account could be opened by individuals or entities, or for children and the sick by donors, which would be managed by their parents or legal representatives. The Bank provides an eight percent interest rate for charities’ savings accounts, a percentage point higher than the Bank’s normal deposit rate.
“The bank aims to expand its customer base and serve humanitarian organisations and individuals,” said Belete Dagnew, vice president of corporate service at the Bank, which has 185 branches all over the country and serves over a million account holders.
The savings account requires a minimum deposit of 60,000 Br for donor individuals and 100,000 Br for organisations, which will be held as a block account. After a year, customers can start donating from the account to an organisation or individual of their choice.
The Bank has also arranged an option that enables donors to increase interest rates based on the amount of deposits they are willing to make.
Donor organisations have raised their concerns on the implementation of the service, arguing that they run project-based donation programs and that they may find it hard to open block accounts.
But Adugna Abebe, branch operation director of the almost decade-old Bank, which had 4,080 shareholders and a paid-up capital of 1.3 billion Br at the end of last fiscal year, says that the assessment conducted by the bank shows that most organisations have enough working capital to gain from the service.
“But we are flexible and willing to adjust based on the feedback we get from the customers,” he said.
Currently, Abay, which reported a 66pc rise in its net profits to 317 million Br during the last fiscal year, is providing five basic products that incorporate more than 17 services within them.
Banking experts appreciate the new product, arguing that this shows the financial institutions’ competitiveness and creativity to attract more customers and increase their profitability.
The service would encourage people who wish to help others but do not have access to the organisations or information concerning where the people in need of the aid are, according to Habib Mohammed, a financial expert with a decade and a half of experience in the sector.
“As most of the charity organisations are generating hard currency, it could also be a good source for the Bank and the nation,” he said.
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