'No interest' gains interest with British Muslims
(Page 2 of 2)
When she asked her bank to withhold interest, "they looked at me like I was crazy," she recalls with a laugh. At the IBB, where Ms. Gassar's savings account earns money in line with the success or failure of the bank's investments, "I have a weight off my shoulders," she says.Skip to next paragraph
Subscribe Today to the Monitor
The potential market for Islamic home financing and other services is enormous, HSBC's Mr. Ali says. Some 134,000 Muslim households have conventional mortgages, worth £9 billion ($16.2 billion), he says; half the British Muslim population is under 30. "This is a key market for us," Ali says.
For the time being, the market is modest. HSBC Amanah says it has sold 2,000 home-finance packages and opened 1,000 bank accounts, while IBB has 9,000 customers after a year of operations.
The banks have had to work for those customers. They held lengthy discussions with British tax authorities and the agency regulating financial markets, explaining Islamic transactions and negotiating changes in the law to accommodate them.
"The British government was very receptive," says Piranie, from the moment a few years ago when Eddie George, then governor of the Bank of England, got talking on a train with a Muslim couple who explained why they could not buy a home and asked him to help. "He immediately set up a working group to see if the problem could be solved," says Piranie, "and we've been very pleased with how supportive the Inland Revenue [tax authority] has been."
Both IBB and HSBC Amanah faced skepticism from serious Muslims, who doubted their products were really sharia-compliant. "A lot of young graduates use the Internet to explore our products, find out who is on our sharia board, and in the beginning we had to answer a lot of difficult questions," says Ali.
Britain is the only European country to have authorized Islamic banking. That is partly, suggests Michael Gassen, a German Islamic finance consultant, because Pakistanis - numerous in Britain - are more involved in banking than North Africans, who predominate in French immigrant circles, or Turks, who make up most of Germany's immigrant population.
Britain's multicultural approach to minority issues - accommodating minorities wherever possible - encouraged the sort of official effort needed to legalize Islamic banking, he points out. "In France, it would be much more unlikely that the government would support any religious group," Mr. Gassen says.
Not that the initiative is necessarily entirely altruistic. "The UK wants to be recognized as a major player in Islamic finance," says Ali, and with billions of dollars flowing into markets from the Gulf countries, the stakes are high.
The stakes are high for Begum, too, though in a different way. "We try to do everything according to Islamic laws," she says, scooping her 3-year-old son Fahim off the floor. "I want my children to grow up in an environment where we don't just preach something, we practice it, too."
The Koran makes four references forbidding riba, which is translated as usury. Islamic scholars have generally equated any interest, not just "excessive" rates, as usury. Verses 278 and 279 of the Al Baqarah Sura of the Koran read, "O you who believe, fear Allah and give up what remains of your demand for usury, if you are indeed believers. If you do not, take notice of war from Allah and his messenger, but if you turn back you shall have your capital sums, deal not unjustly and you will not be dealt with unjustly."