ONE of Australia’s major banks is planning to introduce “Muslim-friendly” loans that do not charge interest, to comply with Sharia law.
Instead, the National Australia Bank will structure an Islam-approved line of finance to make money from alternative methods.
For example, to get round the Islamic ban on usury – or unfair lending – a Muslim mortgage often works by the bank buying the property, then selling it to the customer at a profit, with the customer then repaying the entire sum in instalments.
In this way the profit margin is built in from the start. It also has the advantage of making the loan immune from future interest rate rises.
I’ve got an idea. Tell people new to Australia that what we do here is charge interest on loans and if you get a loan through a bank, usury doesn’t come into the equation because of competition and government regulations. Some might argue differently but it’s basically true – thus the Islamic ban on unfair lending doesn’t apply.
Admittedly it’s a bit different from 12th century finance but it does work.