Muslims win 'halal' banking breakthrough
Sunday 22 August 1999
If a solution is found, up to a million British Muslims would be able to open a bank account in this country for the first time.
"A lot of them keep their money at home," said Muazzam Ali, chairman of the Institute of Islamic Banking and Insurance. "If Islamic banking was allowed, we believe a lot of Muslim people would come forward."
Around 18 banks in Britain offer non-interest-based mortgages and investment schemes geared to Muslims.
However, according to Bank of England rules, a bank can only be licensed as such if it takes deposits and pays interest. But now that institutions such as supermarkets have entered financial services, Muslim groups are turning to the regulator in the hope of finding a solution.
The Institute of Islamic Banking, the Islamic Foundation and the Muslim Council of Britain will meet Mr Davies on 8 September. "This is a very important step forward. They are listening," said Richard Thomas, deputy chief executive of the Islamic Banking Unit of the United Bank of Kuwait.
Regulators have been wary of Islamic banking practices ever since the collapse of the Bank of Credit and Commerce International (BCCI) in the early 1990s. BCCI did not practise Islamic banking but many of its clients were British Muslims. The only UK Islamic bank, Alabarak Bank, had its licence revoked in 1993 by the Bank of England.
All other Islamic banks are based in Muslim countries, with Bahrain as their financial centre. There is an estimated $100bn (pounds 62bn) invested with Islamic banks.
Islamic banks operate like a large mutual fund, investing in equities markets apart from companies with interests in banks, casinos and alcohol. The basic religious concept is that the rich shouldn't get richer simply by having money, but also that funds should be put to productive use through corporate investment.
"It's a cross between ethical and merchant banking," said Mr Thomas.
The Bank of Kuwait is the only bank in the UK to offer "halal mortgages", by which the bank purchases the house and the occupants pay the loan back in the form of rent.
- 1 Barbarians vs Samoa interrupted by sprinklers as fans criticise lack of Wi-Fi and poor seating at West Ham's Olympic Stadium
- 2 Watch the Supermoon live: How to see the brightest Moon of the year tonight
- 3 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
- 4 Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
- 5 David De Gea to Real Madrid: Real finally get their man with £29m bid for Manchester United goalkeeper
Caitlyn Jenner car crash: Driver who died in collision sued by surviving passengers for $18.5m
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Turkey duped the US, and Isis reaps rewards
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says jobless migrants should be banned from entering the UK
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...