Islamic Bank of Britain has launched the first ‘halal’ young person’s savings account in the UK market and is offering all customers who open an account before 1st May 2006 a £10 credit to get them started.
Islamic law states that interest is forbidden and that wealth can only be generated through legitimate trade and creation of assets. This means that Britain’s 1.8 million Muslims, cannot take advantage of conventional interest paying savings accounts. Islamic Bank of Britain’s new account allows younger customers to receive profits on savings comparable to traditional interest but which, crucially, does not contravene Sharia’a law.
The new Young Person’s Savings Account is available for people aged 0-16. While it is held in the child’s name, it can be opened by a parent, guardian or relative who acts as trustee. Savings are tax efficient and deposits can be made by anyone, with the option to have benefits, such as Child Benefit paid directly into the account. At the age of 14 the account holder can gain access to the account, subject to the approval of the trustee, and at 16 money is transferred to a normal savings account.
An account can be opened with as little as £1 and there is no maximum limit. Profit is calculated and paid on a monthly basis with statements issued quarterly. Withdrawals can be made with no previous notice.
Ashraf Piranie, financial director at Islamic Bank of Britain, commented: “The Young Person’s Savings Account is the latest enhancement to our growing portfolio of Sharia’a compliant products, which later in the year will also include a Child Trust Fund.”
He continued: “As the only UK bank currently providing a ‘halal’ savings option it makes sense for us to broaden our offer to younger members of the community. This new account will help to make it easier for parents and family members to save for their children’s futures. It is Sharia’a compliant and further enhances Islamic Bank of Britain’s position as the only totally Islamic British Bank.”
Special Launch Offer
Any account opened before 1st May 2006 will be credited with £10 from Islamic Bank of Britain. This £10 incentive is limited to one per child.
How Does it Work?
Islamic Bank of Britain’s Young Person’s Savings Account aims to encourage a lifetime savings culture. It is based upon the Muslim principle of Mudaraba, which is a contract between two parties, one who provides the funds (customer) and the other who provides the expertise (Islamic Bank of Britain). Investment monies provided by customers will be used in Halal transactions, with profits shared equally between the bank and customer.