The first Islamic British bank is expected to opened in London nexy month, having received authorisation by the FSA.
The Islamic Bank of Britain will be the first British bank to fully operate in accordance with Islamic Sharia’s principles.
A range of Sharia-compliant savings products will be offered to Britain's 1.8m Muslims followed by a telephone and postal banking to be launched in November and a mortgage product by the end of the year, assuming regulatory approval.
An internet banking service is planned for early 2005 and branches will be opened in Birmingham and Leicester, with more to follow.
Under Islamic principles, all money must be invested ethically, so no investment in business dealing with interest, pornography, tobacco or alcohol.
In particular, giving and receiving of interest is forbidden, money cannot be traded for money although money can be used to buy goods or services, which can then be sold for a profit.
One example presented by the bank to explain what happens instead presents a customer who wants to buy a computer.
Rather than lend money and charge interest, the bank would buy the computer and then sell it to them at a fixed price or lease it charging a rental fee until the item is fully paid for, albeit still trying to be competitive with traditional banks.
“As Islamic banking operates without the use of interest, the product we offer our customers are structured in a different way to those in conventional banks,” says Michael Hanlon, managing director of the Islamic Bank of Britain.
“We are confident we can provide customers with a range of Sharia’s compliant products and services, equivalent to those available in a conventional bank and competitively priced.”IFAonline
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