The SME Development Finance Corporation (SDFC) has initiated a landmark transition to convert its existing loan portfolio into a completely Islamic Shariah-compliant financing structure.
This move marks a significant step in SDFC’s evolution into the fully Shariah-compliant digital subsidiary of the Bank of Maldives (BML), aimed at fostering innovation and enhancing financial accessibility within the nation’s crucial Small and Medium Enterprise (SME) sector.
The conversion will commence immediately with the deployment of the Diminishing Musharaka contract, a widely accepted mechanism in Islamic banking. SDFC plans to subsequently expand its offering through the introduction of further Shariah-compliant instruments, including Wakalah Bil Istithmar and Tawarruq, as logistical arrangements are finalised.
The shift is integral to SDFC's strategy to provide a new ecosystem of financial solutions and increase financial participation across the country.
A crucial component of this change addresses the needs of existing clientele. SDFC confirmed that efforts to convert conventional facilities to Shariah-compliant ones will begin immediately where special priority will be given to customers currently facing repayment difficulties, utilising Islamic refinancing principles to offer concessions such as extending repayment periods. This facilitates the regularisation of facilities for customers within the framework of permitted Sharia procedures.
“With the most significant change in SDFC's history, we will operate the company as a Sharia-compliant digital subsidiary of Bank of Maldives,” Badruddin Hassan, CEO and Managing Director of SDFC said.
“This move will ease the difficulties faced by our customers in loan repayment and enable them to get on track with Sharia-permitted solutions that make opportunities easily accessible.”
The widespread implementation of these changes will be phased over the coming months, with SDFC aiming for full completion by the first quarter of 2026. Customers will receive detailed updates on the changes via the SME portal and through direct communication to ensure a smooth transition.
Upon completion, SDFC is set to become a leading player in the digital transformation of banking services for SMEs in the Maldives, further strengthening BML’s role in sustainable economic development.
The corporation has affirmed its priority will be empowering key economic sectors, including start-ups, women-run businesses, fishermen, farmers, agribusinesses, and entities involved in digital and commercial activities.