Why is there the need for an Islamic bank in the UK?
Britain's 1.8 million resident Muslims currently have no access to a banking service that is provided by a stand-alone Islamic Institution. There are also estimated to be over 1/2 million long term or regular visitors to the UK who would have a use for an Islamic Banking Service.
What is the difference between Islamic banking and Conventional banking?
The main difference between Islamic and conventional banking is that Islamic teaching says that money itself has no intrinsic value, and forbids people from profiting by lending it, without accepting a level of risk – in other words, interest (known as "riba") cannot be charged.
To make money from money is prohibited – wealth can only be generated through legitimate trade and investment. Any gain relating to this trading are shared between the person providing the capital and the person providing the expertise.
At Islamic Bank of Britain, we generate all our profit through Sharia’a compliant trading and investment activities. We then share the profits with our customers at a pre-agreed ratio. In order to share profits you must hold one of our savings or investment accounts.
How are you funded?
Islamic Bank of Britain currently has £14 million in start-up capital which were raised by founder shareholders both in the UK and in the Gulf. We plan to increase this amount substantially through an Initial Public Offering in the UK and by another Private Placement in the Middle East, by which we intend to raise between £40-50million – sufficient for our medium term business development objectives.
How do you generate profit to pay a customer?
The money our customers deposit into their savings accounts go into a pool, which is then invested by us in Sharia’a compliant financing and investments. The profits generated from these activites are then allocated to different sources of funds raised by us. We aim to ensure that profit rates paid on all our Savings Accounts are market-competitive.
Surely you are just charging interest and dressing it up as
something else?
No. We participate in the risk of the transaction and accordingly earn profit. Interest is fixed and does not require participation in risk.
The fact that the profit we make through trade and share with customers are similar to interest rates is because we operate in a conventional economic environment. The safest and best way for you to judge the value of what we offer is to be able to compare our rates to what you would receive from conventional financial institutions. We make every effort to remain competitive so that our customers are not penalised by banking in a way that is true to their faith.
Other banks have Islamic finance offerings. What makes Islamic Bank of Britain different?
Islamic Bank of Britain is the UK’s only stand-alone, Sharia’a compliant, retail bank.
As a standalone bank, we make every effort to ensure that we do not compromise the principles of the Islamic faith and fund all our operations on a Sharia'a compliant basis.
How does an Islamic mortgage work?
On 1st July 2008 IBB announced details of its new Home Purchase Plan, the mortgage alternative. It's based on the Islamic finanacing principles of Ijara (leasing) and Diminishing Musharaka (partnership). For more information see the Home Purchase Plan section.
When will you be opening branches and where?
We plan to open branches throughout the UK, wherever there are significant concentrations of the Muslim community. We will have a number of branches in selected areas of the country and, with over half the UK Muslim community residing in the London area, we plan to open further branches in London. But we also plan to open branches in Birmingham, Leicester, Manchester, Leeds, Bradford and Glasgow.
I don’t have a branch near me. How do I conduct my day-to-day banking?
We offer postal, telephone and internet banking. Please call our Customer Services Centre on 0845 6060 786 to conduct your day-to-day banking.
Do you employ only Muslims?
No, we employ the best person for the job regardless of colour, creed, gender, ethnicity etc. We are committed to the equal opportunities policy.
Do you have prayer rooms for Muslim staff?
Yes. Provision will be made to cater for the religious needs of Muslim staff employed in Islamic Bank of Britain. We will also endeavour to open branches close to Mosques at the heart of Muslim communities.
What provision do you make for customers who do not speak English?
As a UK bank, our target customer market is the British Muslim who is a British citizen. All our printed material is in English and our branch staff speak English.
However, we recognise that some of our customers will appreciate the opportunity to converse in their native tongue. Therefore we do intend to recruit amongst our customer facing staff those who have linguistic skills – we already have telephone banking staff who speak Urdu, Arabic and Bangladeshi. In certain market areas we will also produce literature in appropriate languages.
When do you plan to launch in Europe and how will you do this?
Under EEA (European Economic Area) legislation we should, after at least two years of satisfactory operation in the UK, be able to extend our operation into other parts of the European Union. France and Germany are countries of specific interest due to the number of Muslims resident in these countries. Our ability to commence operations there will be facilitated by the business model we have developed and which is capable of easy transportation or extension.
How do I open an account?
You can call our call centre on 0845 6060 786, where we will take your personal details over the phone and send out an account opening pack. You will need to complete the application form it contains, and supply proof of identity documentation, before we can open an account. You can also visit one of our branches, where our branch staff will be happy to open an account for you.
Can I have a debit card with my Current Account?
Yes. Depending on your financial status, the account comes with a chequebook, debit card and cheque guarantee card and, of course, you can withdraw money at your own convenience as and when required.
Does an Islamic Bank of Britain Current Account earn profit?
No. If you wish to make a profit on your savings, you could open one of our Savings Accounts.
Do your accounts have an overdraft facility?
No overdraft facility is available. However, should you find yourself in need of cash to meet an unexpected expense, such as medical bills or a wedding, you could apply for a personal finance facility.
Can I set up standing orders and direct debits on my current account?
Yes, you can set up standing orders and direct debits, just like any conventional bank.
What happens if my current account is overdrawn?
Obviously, we are unable to charge penalty interest to any account. However, we will charge an administrative fee for items such as returned cheques and letters of notification. In accordance with the principles of fairness inherent in Sharia’a banking, the charge will reflect our expenses incurred.
If an account is consistently conducted in an inappropriate manner, we will close the account.
What’s the difference between a conventional mortgage and an Islamic home-buying facility?
There are several key differences. With a conventional mortgage, you borrow money to buy a house and then pay the money back over a number of years. You are charged interest on the money you borrow, which contravenes Sharia’a Principles. With our Islamic home-buying facility we, Islamic Bank of Britain, share with you in purchasing the property and you then pay rent on our share of the property. Over time you will be able to purchase our share and reduce your rentals. |
