Lloyds TSB is launching its range of Islamic financial services nationwide, following a successful pilot.
From today, Britain’s two million Muslims will have access to current accounts and mortgages which comply with Islamic law (Shariah), in every one of the bank’s 2,000 branches.
In the case of the Islamic mortgage, instead of lending money for a property, the bank buys the home on behalf of the customer, contributing up to 90% of the purchase price. The customer pays the remaining percentage upfront and pays the outstanding sum over an agreed term, together with a rental payment.
The current account offers no credit interest and no overdraft facility, but it does provide a debit card and does not charge a fee or require a minimum balance. The funds held by Lloyds TSB on all Islamic current accounts will also be held in accordance with Islamic law and will not be invested in industries which are not permitted in Islam.
In order to ensure that the current account and mortgage are fully compliant with Islamic law, Lloyds TSB has consulted with a board of renowned Islamic scholars3, who have advised on all aspects of Islamic finance law.
The Islamic banking products are designed to provide an alternative for Muslims, many of whom opt out of traditional banking services altogether, in order to avoid interest, or resort to conventional interest-based current accounts and mortgages, due to lack of choice.
Under Islamic law, both the payment and receipt of interest are forbidden, which presents a problem for Muslims wishing to borrow, or save, without going against their faith. From today customers will be able to apply for the Islamic products in any of the bank’s branches, or over the telephone.
Paul Sherrin, head of islamic financial services at Lloyds TSB, says: “Britain is home to a large and fast-growing Muslim community, but many have found that their financial needs have been left wanting.
“Having spoken to Muslims across the country we know that more than three-quarters want current accounts and mortgages that fit with their faith. By making these products available nationwide we’re bringing Islamic banking into the mainstream and we’re giving the Muslim community access to financial services that meet their needs without compromising their religion.
“From today, Muslims across Britain will be able to use our Islamic banking services wherever they live. We’re now the largest provider of Islamic banking across the UK and customers will be able to make use of our 2,000 branches, 4,000 ATMs, as well our Internet or telephone services”.