'No interest' gains interest with British Muslims
When Abul Rahman and Shalina Begum, two young Bangladeshi immigrants to Britain, got married five years ago, their parents urged them to get into the housing market quickly.
They would have liked to, but they couldn't. It would have meant taking out a mortgage, and paying interest on the loan. Mr. Rahman and his wife are devout Muslims; paying interest is forbidden by the Koran. The British banking system could not help them. They found a place to rent, instead.
Today, however, the young couple are proudly living in their own three-bedroom terraced house in east London - and not breaking any religious rules. They are among thousands of families taking advantage of a boom in Islamic finance in Britain, offering Muslims bank accounts, home financing, and insurance policies that comply with sharia, Islamic religious law.
"There are 1.8 million Muslims in Britain, and a good number of them have found it very difficult" to bank, says Ashraf Piranie, finance director of the Islamic Bank of Britain (IBB), which opened its first branch in London a year ago Wednesday. "There was a gap in the market."
The IBB is not alone in seeking to fill that gap; Lloyds TSB and HSBC, two of the country's largest retail banks, are also providing services that do not offer or charge interest, nor invest in businesses dealing in alcohol, tobacco, pornography, or pork.
"There is a demand," says Amjid Ali, the head in Britain of HSBC Amanah, the international bank's Islamic arm. "Muslims' values and belief systems are different, and many of them have refrained from entering the world of finance using conventional mortgages and interest-bearing accounts."
Mr. Rahman, a community warden who helps the police in the predominantly immigrant neighborhood of Tower Hamlets in east London, is one such Muslim. "You shouldn't change your religion because it is inconvenient," he says, adjusting his knitted black skullcap. "I would never have taken a regular mortgage."
Strictly speaking, Rahman and his wife don't own their home. Their bank bought it from the previous owners, and now rents it to the couple, whose monthly fee includes capital repayment. When their payments amount to the price of the house plus an administrative fee, in about 20 years, the bank will transfer ownership to them.