Muslims Find Banking That's Fit for Their Faith
Byline: RICHARD DYSON
BANK accounts that pay no interest? Not a popular idea, you might think.
But it is perfect for millions of Muslim customers who are not allowed to earn or pay interest under Islamic law.
Though some specialist banks such as Al Ahli, United National Bank and First Islamic Bank have been offering Muslim-compliant financial services for more than a decade, the High Street financial giants have been slow to react.
But attitudes are changing. Last week, Lloyds TSB extended its Islamic current account and home finance offerings. HSBC already offers a range of similar services.
Financial Mail reports on the growth in personal finance for Muslims.
Two million Muslims live in Britain, but it seems only just to be dawning on the banks, mortgage lenders and other financial firms that this group of customers have special requirements.
It is well known that Islamic law, or Shariah, forbids the consumption of pork or alcohol. But Shariah also dictates that Muslims cannot pay or earn interest, known as riba.
The laws were enshrined to protect the poor from greedy moneylenders, but they make it difficult for modern Muslims to take advantage of common financial services such as bank accounts and mortgages.
Some Muslims break with strict Shariah and have traditional bank accounts.
Though the Islamic faith allows Muslims to overlook the rules where there is no choice, there appears
to be a clear preference for Shariahcompliant products when they are available, says Mustafa Hussain, an Islamic finance specialist from legal consultants Taylor Wessing in London.
Amanah, an offshoot of HSBC, launched a Shariah-compliant current account two years ago through 70 branches in areas of high Muslim population. Lloyds TSB has followed suit.
HSBC has attracted 1,000 customers for current accounts and 1,375 mortgage savers. Shariah-friendly insurance, savings and child trust fund accounts are also planned. Shariah allows Muslims to profit through investments, though they have to be screened to make sure that the underlying companies or ventures are not linked to alcohol or activities barred by Shariah.
Like HSBC, Lloyds reckons that most of its Muslim customers will already have bank accounts, but will switch when they realise that a Shariah-compliant deal is available.
Lloyds' research shows that 78 per cent of Muslims have an account of some sort, most of which do not comply with Shariah. …