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Bank guarantee or money in the bank?
Anyone who has had to provide a bank guarantee in favor of renting a property knows how much of this money is missing for the day-to-day running of the household or organization.
The fintech company OBLI estimates that it is NIS 12 billion, money "stuck" in banks, which enjoy an annual income of about NIS 360 million as a result of providing the guarantee
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Bank guarantee
Banks
Fintech
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Roast Greenberg
Wednesday, 03 November 2021, 08:50 Updated: 09:03
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The increase in the cost of living is also expected to increase the amount of bank guarantees for about 100,000 households and about 400,000 small and medium-sized businesses, which come in the form of "imprisoned" deposits in banks against the guarantees required for renting an apartment, office or store.
According to the Central Bureau of Statistics, every second family in Israel is in the red, and the "imprisoned" money burdens the conduct of those who have had to provide various guarantees.
In addition, households and small businesses are required to pay an annual commission for the guarantee given to them, which stands at an average of about 3% of the guarantee amount backed by the cash deposit, when according to the Supervisor of Banks this is one of the highest commissions paid to the various banks.
In practice, the banks set a minimum fee of NIS 400 for this service, which increases the amount of the fee actually paid to some households.
For tenants, this is a "imprisoned" guarantee of an average of NIS 12-15,000 per year, compared to an average of NIS 50,000 for each small business, but for the banks this has a total annual income potential of up to NIS 360 million, which is now a company. The fintech OBLI is interested in biting into it.
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Bank guarantee in favor of a rental contract, narrow that the tenants of the apartments and offices know closely (Photo: ShutterStock)
OBLI Guarantees (OBLI) works to provide guarantees to households and businesses without the need to close the funds in the deposit.
While the banks require, as stated, about 3% of the guarantee amount as a handling fee, the OBLI fee is higher and stands at about 6.5%, but does not require a minimum amount to be paid and can be spread over payments throughout the guarantee period.
OBLI was founded in early 2019 by Danny Ben-Ner, CEO of the company and former CEO of the TEN gas station chain. The company began operations at the beginning of 2021 in partnership with institutional entities, including Hachshara Insurance Company, and the Training Fund Administration.
Its main activity is the issuance of guarantees digitally, which does not require the encumbrance of a fixed amount of money, as is still required among banks in Israel.
Its activity began with the provision of a guarantee to tenants of apartments, after Ben-Ner himself encountered the need to provide it after he asked to rent an apartment for himself.
Danny Ben-Ner, CEO of OBLI (Photo: Rami Zranger)
OBLI won a participation program in which it received about NIS 9 million about a year ago from the Small Business Agency in the Ministry of Economy, to promote an initial financing project that helps small businesses that can now receive bank guarantees from the company without pledging up to NIS 100,000.
Danny Ben-Ner, CEO of OBLI: "The activity is a closing circle for us, and for the first time in Israel we allow small and medium-sized businesses the ability to receive a bank guarantee, without having to put their hand in their pocket, and in a relatively simple digital way that does not require physical access to any branch."
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