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Non Muslims turn to Islamic Bank

Non Muslims turn to Islamic Bank as a safer option in UK


4 Oct 2008

Growing numbers of non-Muslims are turning to Islamic banking as customers spooked by turmoil in the Western banking system increasingly see the sector as a safe haven.

The Birmingham-headquartered Islamic Bank of Britain said it had seen significant growth in non-Muslim customers since the onset of turbulence on financial markets as Islamic banks, bound by strict religious principles, are largely seen as insulated from the credit crisis.

Islam’s prohibition on the charging or paying of interest - riba - as well as rules on the kinds of investments they can make are among the reasons Islamic banks are coming through the crisis unscathed.

Islamic Bank of Britain head of marketing Steven Amos said: “Our core business will always be Muslims but the numbers of non-Muslims are really picking up.

“We’ve had massive interest and it’s down to the number of reasons why we’re insulated from the credit crunch.

“There were two reasons for the credit crunch. The first is liquidity - banks lending to each other on the money markets - but Islamic banks do not borrow or lend on money markets because interest is not allowed.

“The second reason Islamic banks are insulated is to do with assets - everything has to involve an underlying asset or service and if you are going to trade in an asset you have to own it first.”

The explosion in complex derivative products over the last few years has left Western banks reeling from exposure to toxic assets often far-removed from their everyday activities.

In contrast the more risk-averse Islamic finance system did not embrace this kind of deal.

“Conventional banks didn’t know what they were buying in these derivatives but we have no exposure to subprime as we just don’t deal in it full stop.

“That is one of the fundamental reasons we are insulated.”

Stipulations that you must own the asset you are trading in also mean practices such as short-selling are not a feature of Islamic banking.

Mr Amos also said the principle of partnership underlying Islamic finance means banks would never enter into the subprime-style agreements behind the current crisis.

“For the benefit of the customers and the bank themselves, we enter into a partnership agreement. “Islamic banks don’t just enter into any agreement, we make sure the agreement is right for both partners.”

The growth in ethical investment in the UK over the last few years has also spelled an increase in interest from non-Muslims attracted by the strong ethical tenets of Islamic banking.

“We guarantee you we won’t invest customers’ funds in alcohol, tobacco, P**Nography or in any form of gambling.

“These factors are often in keeping with the ethical products that we’ve seen growing in the UK over recent years,” said Mr Amos.

The Islamic Bank of Britain is the UK’s only stand-alone fully Shariah-compliant retail bank.

In July it launched its Home Purchase Plan, billed as “the mortgage alternative,” which enables customers to purchase their homes in an ethical and Shariah-compliant manner.

The plan is based on the Islamic financing principles of Ijara, which means leasing, and Diminishing Musharaka - partnership.

For example, the bank contributes 80 per cent of the purchase price and the customer puts in 20 per cent.

Over a period of up to 30 years, the customer will make monthly instalments buying back the bank’s share of the home and with each instalment paid the bank’s share decreases.

Many of the big conventional UK banks have entered into the Islamic finance market in recent years, with big names such as Lloyds TSB offering a Shariah-compliant home finance product.
Posted on 10/5/2008 11:30:28 PM
yeah i do
Posted on 10/12/2008 12:43:51 AM
Assalam O Alaikum

*Thats Nice
Sir One question for You
In Muslim countries Specially In pakistan and Afghanistan islami banks Kyun nahi hain?
Posted on 10/14/2008 5:29:00 PM
nahi aaj kal pakistan mein kafi islamic banks khul rahey hain aur pehlay sey mojood banks apna network strong kar rahe hain
Posted on 10/14/2008 7:11:35 PM
*Thats Nice
but mostly hum usi system ko follow kar rahay hain
Jo Angrezo nay idhar chora tha...!
Posted on 10/15/2008 10:52:34 AM
infact puri dunia mein wohi banking system chal raha hia
Posted on 10/15/2008 6:50:40 PM
Assalam O Alaikum

*yaa Poori dunya main yehi system hain
per Hum Muslim Countries Ko islamic Sharia Follow karna chahiye tha
Saudi Arabia main Bhi yehi system hain?
Posted on 10/16/2008 10:38:19 AM
wahan kafi had tak tu modified system hai ... per aab yahan b sharia laws ban rahey hain .. islamic mode of financing ho rahee hai
Posted on 10/17/2008 2:26:58 PM
benefits k liye hee tu banks hotey hain
Posted on 10/26/2008 11:45:33 AM
US studying features of Islamic banking

RIYADH: The US government is currently studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisis, Robert M. Kimmitt, US deputy secretary of the Treasury, said at a press conference held at the US Embassy.
Kimmitt, who is on an official visit to the Kingdom, also held discussions with Finance Minister Ibrahim Al-Assaf. Today, he is scheduled to meet Saudi Arabian Monetary Agency (SAMA) Gov. Hamad Al-Sayari, Saudi Arabian General Investment Authority (SAGIA) Gov. Amr Al-Dabbagh, Prince Alwaleed bin Talal, chairman of the Kingdom Holding Company, and Saudi investors and bankers. He said that the agenda for the G-20 summit to be held in Washington on Nov. 15, has to be carefully prepared since important topics are to be discussed in just one day. "I am not sure that Islamic banking will also be itemized in the agenda, but it is a subject that is often dwelt in the public and private sectors," he noted. He said that experts in the US Treasury Department are currently learning the important features of Islamic banking.

However, he added that his country is focusing on activities of various governments and central banks in tackling the economic issues. He pointed out that the member countries in the G-20 also includes Islamic countries such as Indonesia and Turkey, besides the Kingdom which has been a member for the past 10 years. Representatives from these countries could present their experiences of Islamic banking in the light of the prevailing situation.

He hoped the G-20 summit will provide an effective platform for the member countries to exchange their views on the current economic problem and lay out a plan for the countries to draw out their respective national plans to ease the situation.

Commenting on his meeting with Al-Assaf, Kimmitt said the items that could be included in the agenda were also discussed. "The geographical representation from member countries would provide a broader view of the crisis and would also benefit the non-member countries through their experiments," he added.

The G-20 summit, said Kimmitt, was proposed by Europeans which was readily accepted by President George W. Bush, who is seeking a common response to the global crisis.

Spelling out the purpose of his visit to Saudi Arabia, Kimmitt said that he has been associating with the Kingdom for more than two decades, but this is a significant visit since he was coming to the Kingdom at a time when there is a threat to the global financial market. "It`s an opportunity for me to present the US perspective ... and hear from the Saudi leadership on the current situation in the Kingdom and in the region," he said, adding that even at a time of crisis, US wants to stress its commitment to tell the countries in the region of the US open investment policies.

Pointing out that a good number of American investors are coming to the Kingdom, Kimmitt said the US government expects reciprocation in the same manner. The deputy secretary is slated to visit the United Arab Emirates, Qatar, Kuwait and Iraq where he would meet the leadership and investors on similar lines.
Posted on 10/28/2008 7:30:46 PM
nice to hear things like this
good job fragi and nice guy
lets hope our islamic banks will take full advantage of the situation and will further modify their products to attract more nonmuslim clients. usually people shy away from islamic financing because the process for grant of finance is somewhat lengthy if that problem is resolved iam sure islamic banks will rule. Inshallah
Posted on 11/11/2008 6:36:02 PM
turn around time 4 islamic banks r almost the same
Posted on 11/23/2008 2:12:58 PM
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