An Austrian bank has announced it will be piloting an Islamic current account in February, the first of its kind in the country.
Vienna-based BAWAG P.S.K. said it will offer current accounts that adhere to Sharia law, which prohibits the charging of interest or making money on savings.
Islamic law also prevents adherent banks from dealing with businesses that are considered sinful, or un-Islamic. These include any that deal with alcohol, weapons, pornography or gambling.
Banks get around laws on "usury" by lending money without interest fees, but encourage patrons to pay back money borrowed in installments instead.
The bank’s decision has not come without criticism. A barrage of complaints followed BAWAG’s statement on its Facebook page, by people who felt Islamic customers would get preferential treatment.
A separate Facebook group has since been started called BAWAG PSK wegen Islamic Banking (boycott because of Islamic banking) and there are already 1760 members.
On BAWAG PSK’s main Facebook group, customers posted messages suggesting they’ll be leaving the group. One user, Dieter Rossboth, posted: “BAWAG bye bye”. Another, Allan von Bohm, described BAWAG’s actions as “intolerable.”
In response, the bank posted a message saying that those with Islamic bank accounts wouldn’t receive preferential treatment.
It also included a note asking people to refrain from racism: “Dear Community, we are open for your questions and comments on our wall. Nevertheless, we ask you to keep our netiquette - among other things, radical, extremist, racist, sexist, or political statements, insults, threats, or personal attacks postings. Friendly Greetings, your bawag p.s.k. facebook [sic].”
The Austrian bank added that anyone, regardless of creed, can open up a Sharia bank account if they believe it will give them a financial advantage.
Big banks go cold on Islamic products
The UK has long been an important finance centre for Islamic banking. Lloyds offer an Islamic current account, and at the al-Rayan bank - formerly know as the Islamic Bank of Great Britain - profits have been rising for the last 18 months.
Speaking to The Independent, Mohammad Khan, head of Islamic finance at the PwC, explained how a Sharia account is established: “There has to be no interest involved and it has to be extremely transparent. It has to be really clear where all the fees are."
He said: "To qualify, a Sharia board has to sign it off; that’s where at least three Islamic scholars look at the product, its marketing, its terms and conditions, and its fees.”
Islam is Austria’s second largest religion and BAWAG PSK has said its target audience are the 600,000 Muslims living in the country.