Australia will see its first Islamic bank open for business in a significant step forward for the country’s 800,000 Muslim population.
Islamic Bank Australia has been granted a restricted license by the Australian Prudential Regulation Authority – the first of its kind Down Under.
The introduction of the bank means Muslims, who cannot pay or receive interest due to their religion, can now achieve their goal of owning a home.
Australia is set to see its first Islamic bank open for business in a significant step forward for the country’s 800,000 Muslim population
Islamic Bank Australia will offer a range of services for Muslim customers, including home finance, savings and everyday accounts.
It will conduct a test run with a small number of clients, before going public, with 8,000 people already on the waitlist.
The bank’s CEO Dean Gillespie, said its home financing model would be ‘joint ownership’, meaning customers would be charged rent while living under the bank’s share of the property rather than paying interest.
‘[The customer] might start off with a 20 per cent deposit…that means they’d start off owning 20 per cent of the house, and the bank would own the other 80 per cent,’ he said.
‘What we allow [the customer] to do is buy more shares of that property over time.’
Islamic Bank Australia has been granted a restricted license by the Australian Prudential Regulation Authority
The tenant’s share in the property increases as they pay rent, until they become the full owner of the home.
Under the Islam faith, the bank is also forbidden from dealing with sectors including alcohol and gambling.
Mr Gillespie said they would also only do business with businesses that are promoting climate-friendly policies.
‘We hear stories about people keeping money under the bed or in the safe at home because they haven’t been comfortable putting it into the conventional banking system,’ he said.
‘That’s something that we’re really hoping to remedy.’
The bank has had significant interest from non-Muslims as well, with people preferring the rental system to accruing interest.
‘We’re constantly getting inquiries from Aussie expats that have lived in the Middle East…and have used Islamic [finance] products,’ he said.
‘They come on to our waiting list and say, ‘we just really like the ethical nature of the products’.’
Islamic Bank Australia’s restricted license allows it to test products with a small number of clients for up to two years, before it can apply for a full license.
The bank have set a target of 2024 to go public. It’s expected there will be more than one million Muslims living in Australia by that date.
‘There’s already six or seven different Islamic banks in the UK…but there’s nothing like that in Australia,’ Mr Gillespie said.—Daily Mail