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Last Updated: Wednesday, 14 June 2006, 06:47 GMT 07:47 UK
Islamic banking goes nationwide
By Julian Knight
Personal finance reporter, BBC News

The bank has taken advice from Islamic scholars
Lloyds TSB is to offer current accounts and mortgages which comply with Islamic law through its 2,000 strong branch network from Wednesday.

The bank has offered such accounts since 2005 but only in a few branches.

The bank will concentrate its main marketing push in about 100 branches in areas with a large Muslim population.

An Islamic scholar advising the bank told BBC News that access to such services would ultimately mean "less exclusion and less extremism."

All money must be invested in industries Muslims consider ethical
The giving or receiving of interest is forbidden
Money cannot be simply traded for money
Money can be used to buy goods or services, which can then be sold for a profit

Traditionally, many Muslims have shunned mainstream financial services and High Street banks because their products do not comply with Sharia law.

Under Sharia Islamic law, making money from money, such as charging interest, is usury and therefore not permitted.

Wealth should be generated only through legitimate trade and investment in assets.

Investment in companies involved with alcohol, gambling, tobacco and pornography is strictly off-limits.


Both Lloyd TSB's current account and mortgage products are open to non-Muslims.

And according to Mufti Barkatullah, one of a four-strong panel of Islamic scholars advising Lloyds TSB, the concept of Sharia appeals to the wider community.

"Sharia is about an ethical way of life and appeals to many people," Mr Barkatullah said.

"I have been told that as many as 20% of people enquiring about Islamic products in one area are non-Muslim."

Mr Barkatullah added that the spread of Islamic financial services would help combat social and financial exclusion amongst the UK's 1.6 million Muslims.

"Everyone needs financial services...we should see less and less exclusion and less extremism," he said.

Lloyds TSB said it will expand its range of Sharia-compliant financial products.

The bank said it planned to launch an Islamic student current account in time for the new academic year.

Islamic Bank of Britain branch
The provision of Islamic financial services is growing

The bank is not the only provider of Islamic financial services; HSBC, the Islamic Bank of Britain, and West Bromwich Building Society all offer Sharia-compliant products.

Chancellor's call

Meanwhile, on Tuesday, Chancellor Gordon Brown called for the UK to become a centre of Islamic finance.

Speaking at the Islamic Finance and Trade Conference the chancellor said he wanted to make the UK "the gateway for Islamic finance".

He pointed to reforms of the tax system to make Sharia compliance easier.

Islamic financial services are big business.

Analysts estimate that worldwide the industry is worth between 200bn to 300bn a year.

UK's Brown backs Islamic finance
13 Jun 06 |  Business
Islamic mortgage market to expand
28 Jul 05 |  Business
First UK Islamic bank opens doors
22 Sep 04 |  Business
Q&A: Islamic finance
09 Aug 04 |  Business
HSBC offers Islamic pension fund
13 Apr 04 |  Business

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