It will be the first time that Britain’s 1.8 million Muslims will have access to banking facilities from a British bank which is wholly operated in accordance with Islamic Sharia’a principles. It will be called the Islamic Bank of Britain and will start operating in September this year.
The Islamic Bank of Britain will be regulated by the FSA and will meet UK banking regulations and safeguards for the customer.
While there are other banks in the UK which offer products that follow Islamic principles (Sharia’a) all have their origins within non-Sharia’a conventional banks.
The Islamic Bank of Britain’s headquarters and central operations are based in central Birmingham. The bank will open its first branch in Edgware Road, London, in September this year and will offer a broad range of Sharia’a compliant savings products. Within the next month there will be further branches in Birmingham and Leicester with other branches to follow.
By November this year, the bank will operate nationally via telephone and postal banking and will also offer Sharia’a compliant current accounts with debit cards and consumer financing agreements. Subject to regulatory approval, the bank plans to introduce a mortgage product by the end of the year and an internet banking service in the early part of 2005.
Sharia’a Compliant Banking - Background
Under Islamic principles:
For example, in an interest-based bank, when a customer is granted loan of money, interest is charged on the use of that money. The Islamic Bank of Britain will not lend money but deal in a real item. So if a customer wants to buy a computer, the Bank would buy the computer and then sell it to the customer at a fixed price, or lease it to the customer and charge a rental fee until the item is fully paid for by the customer.
Michael Hanlon, Managing Director, comments: “As Islamic banking operates without the use of interest, the products that we offer our customers are structured in a different way to those in conventional banks. We will be offering a broad range of Sharia’a compliant banking products and services and will be using the latest technology systems to ensure that we provide customers with a reliable and quality service.”
To ensure that the Bank is operating in a wholly Sharia’a compliant way, a group of Islamic Scholars act as the Islamic Bank of Britain Sharia’a Supervisory Committee and all services, activities and investments must be approved by this Committee. The Committee will also undertake regular audits to ensure that all activity is compliant with Sharia’a.
Michael Hanlon adds: “We are confident that we can provide customers with a range of Sharia’a compliant products and services, equivalent to those available in a conventional bank and competitively priced.”
Lord George, former Governor of the Bank of England, commented on learning of the announcement: “I am absolutely delighted that the FSA has approved Islamic Bank of Britain's application for a licence to accept deposits. This will enable Islamic Bank of Britain to offer a wide range of Sharia'a - compliant banking services in this country, which will provide real comfort to the many devout Muslim members of our society. At the same time it will usefully extend the range of financial service products available to us all. I wish their innovative venture every success. "
Iqbal Asaria, chair of the Muslim Council of Britain Business & Economics Committee, added: “The Muslim Council of Britain welcomes the Islamic Bank of Britain, the first fully Islamic Bank to be set up in the UK. Its founding comes at the end of a unique partnership between the Muslim community and the regulatory authorities in the UK which has seen the overcoming of many misconceptions about Islamic Banking and finance.
“The granting of a banking licence to the Islamic Bank of Britain by the Financial Services Authority is a watershed event in the history of Islamic Finance in the UK as it marks the beginning of the launch of fully regulated Sharia’a compliant products for the Muslim community.
“We are confident that this will open up channels for the launch of the full range of Islamic financial instruments in the UK to service the needs of the two million strong Muslim community. We also hope that eventually, pioneering UK institutions like the Islamic Bank of Britain will be able to provide their services to the fifteen million strong Muslim community in the European Union.”
Those wishing to receive information on the Islamic Bank of Britain can telephone
0845 6060 786 or log onto www.islamic-bank.com.
Company Background
The Bank is a UK registered company sponsored by a group of prominent Gulf and UK investors, including major Islamic financial institutions.
It is an independent Islamic Bank and not part of a larger conventional banking group. This means that the Bank does not compromise on its principles or practices and does not mix its capital in such a way as to compromise Sharia’a.
