Lloyds TSB expands Islamic banking
The Islamic Current Account and Islamic Home Finance will be available from a total of 32 branches across the country. These products are designed to meet the banking needs of Britain's two million Muslims, for whom interest is forbidden.
A pilot for Lloyds TSB's Islamic Financial Services began in February this year, with five branches and has been expanded further in recent months.
Paul Sherrin, head of Lloyds TSB Islamic Financial Services, said: “With more than thirty branches now offering Islamic Financial Services throughout the UK, there is a real choice on the high street for Muslims who want an alternative to conventional current accounts and mortgages. We're proud to be able to give these customers something we know that they will value.
“We're offering products which not only meet the needs of Muslims, but are also truly competitive. The fact we're expanding the pilot is testament to the popularity of our Islamic financial services so far.”
Both the current account and home finance product comply fully with Islamic law (Shariah) which forbids both the payment and receipt of interest, known as Riba. The current account offers no credit interest and has no overdraft facility, but it does provide a debit card and unlike some other compliant accounts, does not charge a fee or require a minimum balance1. The funds held by Lloyds TSB on all Islamic current accounts are held in accordance with Islamic law.
Similarly, the home finance product will not be based on interest payments. Instead of lending money for a property purchase, the bank will buy the home outright, contributing up to 90 per cent of the purchase price. The customer will pay the remaining percentage upfront and would repay the outstanding sum over an agreed term, together with a rental payment.
In order to ensure that the products are fully compliant with Islamic law (Shariah), Lloyds TSB has consulted every step of the way with an Independent board of specialist scholars, who were able to advise on all aspects of Islamic law.