Tuesday, March 22, 2005

Lloyds TSB & Islamic Mortgage

As many already know, under Islamic law both payment and receipt of interest are forbidden. This has created sort of a problem for Muslims in countries that offer no Islamic banking systems.

Now Lloyds TSB, Britain's 5th largest bank became the country's first high street bank to offer mortgage services compatible with Islamic Sharia law.
Lloyds TSB said it would cater to the needs of Britain's approximately 1.8 million Muslims, following in the footsteps of the Islamic Bank of Britain (IBB), which opened in London last September offering the same service. Under the new Lloyds TSB mortgage, the bank would fund the majority of a house purchase. The customer would then repay that sum over a fixed period, alongside a rent payment for use of the property.
The move follows Lloyds TSB's recently-launched Islamic bank account, which also offers no interest or overdraft facilities to comply with Sharia law.
The mortgage and current account were being piloted in branches across Muslim populated areas of Britain, including Edgware Road in central London, Luton, north of the capital and the country's second city Birmingham.
Source: Middle East Online

I believe this is simply great. As long as the system is optional, not forced on non-Muslim citizens, and as long as it does not contradict the country’s interest nor negatively affect society, why not have it and open the door for more investments!