KUALA LUMPUR, Malaysia -- Fawzi Ahmed was more concerned with
morality than profit when he opened an account in 1983 at the
fledgling Bank Islam, a bank run by Islamic principles.
Most important was Islam's ban on interest payments as usury.
Fawzi and other Muslim depositors would not be paid interest on the
money in their accounts -- rather, they would share in the bank's
profits on its investments in businesses.
But ask Fawzi, a municipal surveyor, why he uses Bank Islam
and he doesn't even mention religion.
"Convenience. It's near my office in City Hall," Fawzi said one
sunny morning outside one of the bank's branch offices in Kuala
Lumpur, Malaysia's bustling capital. "They have checking, everything
Founded in Egypt three decades ago simply to give pious Muslims a
safe place to keep their money, banking by Islamic principles has
grown into a competitive, multibillion-dollar industry that is
expanding rapidly in many parts of the world.
Islamic banks are common in the Middle East and have sprung up as
far away as London and the Philippines. The theocratic leaders of
Iran and Sudan require their bankers to do all of their business by
Since Bank Islam became Malaysia's first to operate on Islamic
principles, the industry has taken off as a consumer business in
Southeast Asian nation. Malaysia's government is encouraging its
Islamic bankers to try to become global leaders by offering such
innovations as home mortgages and a growing array of sophisticated
The bedrock of Islamic banking is the ban on interest payments.
These are regarded by the Koran, Islam's holy book, as exploitation
because depositors and lenders make money without providing labor or
Islamic banks pool deposits to invest in construction, commodities
trading and other businesses that do not profit from interest
Commercial borrowers pay the bank and its depositors a share of
their profits instead of interest. That involves risk, because the
bank does not know in advance what the profit, if any, will be.
Led by giants like Saudi Arabia's al-Rajhi Banking and Investment
Corp., which has $8 billion in assets, the world's Islamic bankers
are believed to preside over total deposits of up to $70 billion.
That is still less than the resources of a single big Western or
Japanese bank. But rapid growth in the industry has prompted
Citibank and other major international banks to open Islamic
In Malaysia, Bank Islam's deposits have grown to some 3 billion
ringgit, about $1.2 billion, while other banks have followed in its
footsteps by opening separate teller windows to handle Islamic