Creating products and raising awareness

Globally, Islamic banking finance industry assets have reached close to $300 billion in 2005 and the market has an estimated annual growth rate of more than 10 per cent, according to recent figures gathered by the Council for Islamic Banks.

With more than 270 Islamic financial institutions in more than 40 countries, it's hard to believe that UK Muslims would struggle to find banking services that fit with their faith, but at the moment the market is mainly concentrated in Muslim countries of the Middle East, North Africa and South East Asia. The European market is relatively untapped.

This seems quite an oversight, as the Muslim community is one of the fastest growing in Britain today. There are around two million Muslims living in the UK and about 700,000 temporary visitors. Many are homeowners, and nearly all require bank accounts, but until recently, there were few financial service products that met their needs while complying with Islamic law.

Our initial research showed that more than three-quarters of British Muslims wanted banking services that fitted with their faith. This presented us with a great opportunity and a challenge we simply couldn't turn down. In February 2005, Lloyds TSB became only the third British bank to launch a current account designed to comply with Shariah regulations following in the footsteps of HSBC and the Islamic Bank of Britain. The current account was followed in March with a home finance offer to help Britain's Muslims purchase their own homes.

Clearly, to move into Islamic financial services it was essential to adhere to the required conditions, namely, complete segregation of funds, existence of a Shariah supervisory board, management that is committed to Islamic financial concepts, safeguarding of Muslim funds from negligence, trespass and fraud, and compliance with the standards of the Accounting and Auditing Organization for Islamic Financial Institutions.

We talked to a number of scholars and put together a panel of four: Sheikh Nizam Yaquby, Dr Muhammed Imran Ashraf Usmani, Mufti Abdul Kadir Barkatullah and Muhammed Nurullah Shikder.   The board of scholars selected were highly qualified to issue fatawa on financial transactions. In addition, they had considerable experience in working with modern financial service companies around the world.

Paul Sherrin (Head of Islamic financial services, Lloyds TSB)

Reference:
www.islamicbankingandfinance.com