Britain wants to be hub for Sharia banking
Zahid Chisti is a meticulous man. As a pharmacist he has to be — he must carefully count the pills and measure the medicine he dispenses. When it come to money, Zahid also likes to do things by the book — in this case the Koran.
“Under Sharia Law we’re prohibited from taking or giving interest.” says Zahid. “I try to avoid taking or giving interest in any of the transactions I process, in my business or in my personal life.”
When he saves money with his local Islamic bank, Zahid gets a return but he doesn’t officially earn interest. He shares in the profit the bank makes from investing his funds and the bank does not invest in anything “un-Islamic,” like alcohol or gambling.
Three million muslims live in Britain, and although not all are as devout as Zahid, more and more of them are demanding financial products compatible with their faith. Sultan Choudhury, head of the Islamic Bank of Britain, the UK’s first fully sharia-compliant financial institution, says his business is booming:
“Our Islamic mortgage book has gone up nearly 90 percent in one year. Our deposits have gone up 22 percent. Customer numbers are growing on average at 8 percent per annum,” claims Choudhury.
This is a global phenomenon. Islamic finance is growing fast around the world. Sharia-compliant transactions are now worth an estimated $1.2 trillion a year, and that figure is expected to triple before the end of the decade. British business leaders are eager to cash in on this expanding revenue stream.
“We look at a growing market and think to ourselves: we would like to have more of that,” says David Slater of London and Partners, a body set up to promote business in the British capital.
Slater and his colleagues, backed by the British government, are now pushing for London to become the global hub for Islamic finance and they’ll be pressing their case at the 9th World Islamic Economic Forum, a huge gathering of Muslim politicians, business leaders, and scholars. London will host the Forum in October, the first time the event will be held outside a Muslim country.
“We want to say, we’re open for business and we want your business and we’ll produce the right sort of products to enable that business,” says Slater.
Britain has already thrown open the door to Islamic finance. More Islamic bonds, or sukuk, have been issued on the London Stock Exchange than any other bourse — more than $34 billion worth. The U.K. has the largest Islamic banking sector outside the Middle East and Asia — 22 banks, 12 more than the United States. Britain has already changed its commercial and taxation laws to accommodate sharia-compliant finance, although not everyone is happy about it.
“I don’t think religion should be playing a part in our finance system in this way,” says Terry Sanderson, president of the National Secular Society. Sanderson is worried that by expanding Islamic finance, Britain may be letting Sharia Law in by the backdoor and giving British and foreign Muslims too much political leverage.
“They would have a large stake in this country through the finance system, which they might use to manipulate the political processes,” he says. “I’m not saying they will do that. But that’s the possibility if this form of finance becomes really big.”
But advocates for London’s financial center dismiss these concerns. They say the city is the ultimate, international financial souk with more currencies traded there than anywhere on earth, and with every conceivable form of finance. It is too big to bully. It has nothing to fear from Sharia.
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