Leading British Bank Offers Islamic Account

LONDON, February 17 (IslamOnline.net & News Agencies) – With an eye on the sizable Muslim community in the country, a leading British bank has launched a new interest-free checking account.

Lloyds TSB Group Plc, Britain's fifth- largest bank by assets, is offering an account that comply fully with Shari`ah (Islamic law), reported The Guardian on Tuesday, February15 .

The new account, to be piloted in cities across the UK, including Birmingham and Luton, will not pay interest on credit balances or have an overdraft facility, it added.

Under Shari`ah, interest on bank accounts is haram (unlawful) because such interest is an increase of money made without effort or trade.

Islam prohibits depositing one’s wealth and taking specified increase without the risk of either loss or profit making.

Therefore, the type of investment allowed is where a person deposits money in an account and shares both the risk of making profit or losing.

Shari`ah further forbids Muslims from receiving or paying interest on loans.

“Uncatered for”

Gordon Rankin, current accounts director at Lloyds TSB, recognized that the Muslim community, estimated at nearly two millions, is “one of the fastest growing in the UK and is very much part of the fabric of British life.”

He regretted, however, that the banking needs of British Muslims “have been largely uncatered for and many British Muslims have often had to bank in a way that is against their principles.”

Rankin added: “Our research shows that over three-quarters of British Muslims want banking services that fit with their faith.”

According to The Guardian, has been particular concern among Muslims due to receive the new child trust fund vouchers that there are no Shari`ah-compliant products in which to invest the money.

Parents have a year in which to decide how to invest their child's fund, otherwise the Inland Revenue will automatically invest the money in a stakeholder account, which could invest in companies that do not comply with Shari`ah.

Follow Lead

Ibrahim Mogra, the chairman of the Muslim Council of Britain's (MCB) Mosque and Community Affairs Committee, regretted that British Muslims have had little choice but to use interest-paying accounts, reported the BBC.

“What the Shari`ah scholars tell us to do is whatever interest you gain you get rid of it without the intention of gaining reward from God.

“Even though at the end of the year I just take the interest out and give it away, I've still, in a way, handled money from interest which I really shouldn't be doing,” he said.

The Muslim activists hoped other high street banks would follow Lloyd's TSB's lead.

“The high street banks want to hang on to their customers and now there is an Islamic bank available they may be anxious they might lose their customers.

“I think all high street banks will take this route sooner or later because there's a huge Muslim market in the UK,” Mogra said.

In 2003 , HSBC banking group became the fist high street bank in Britain to offer mortgages and current accounts in accordance with Shari`ah.

A year later, the Islamic Bank of Britain (IBB) became the first Islamic bank to open its doors in the country.