Islamic banking on the rise in UK

16 June 2006
More and more UK banks are catering for Muslim clients with specialist Islamic banking options, such as mortgages and current accounts.

The latest bank to announce such a move is Lloyds TSB, which has launched a new Sharia-compliant current account and mortgage range.

Islamic law, otherwise known as Sharia law, dictates that Muslims must not pay or receive interest and so the majority of high street products are unsuitable due to the charges incurred on borrowing money and the payments received on savings.

Any investments must also only be made in 'ethical companies' – ones that do not deal in arms, alcohol, tobacco or pornography, among others.

"The issue that many within the Muslim community have is that they were struggling [to raise capital to purchase a house] because the sorts of products that were on offer from the major high street lenders involve the charging of interest," said a spokesperson for the Islamic Bank of Britain (IBOB).

"If you look at what the Chancellor of the Exchequer said earlier this week, in terms of encouraging Islamic finance, yes, more high street banks may seek to offer these products."

However, the IBOB said that this did not necessarily secure business in the Islamic market.

"HSBC and Lloyds [for example] have products within their portfolio which are on offer to both Muslims and non-Muslims and which are not Sharia-compliant," the spokesperson continued.

"I think there are many in the Muslim community who are uncomfortable with that."

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