Islamic Finance in Ireland; non-existant?

Farcear

Hey guys,

Just a question for any muslims who have or are considering purchasing property in ireland. I'm just curious as to how you dealt with the prohibition on 'riba' ('interest' and 'usury' to us non-muslim people). Did you get a standard interest-based mortgage or were you able to find some sharia compliant financial product on the market?

On a related note; do any irish financial institutions offer anything even remotely like sharia compliant banking?

Thanks in advance,
Far

BuffyBot

AFAIK (and I stand to be corrected) there is very little available in the Irish market in terms of sharia compliant finance, certainly not from any of the main stream providers.

Bottle_of_Smoke

http://business.timesonline.co.uk/tol/business/law/corporate_law/article2638377.ece

The paragraph @ the end seems to suggest that there's some providers but none I've heard of.

hivizman

In the UK, both HSBC and Lloyds TSB have moved into the Islamic finance market:

http://www.hsbcamanah.co.uk/amanah/hsbcaf.nsf/Pages/UKServices

http://www.lloydstsb.com/current_accounts/islamic_account.asp

They both provide current accounts and Shari'ah compliant finance for home purchase. I don't know whether these banks, or anyone else, are doing Islamic business in Ireland.

moe_sizlak

hopefully our banks will never even consider accomodating such nonesense

wes

moe_sizlak wrote: »

hopefully our banks will never even consider accomodating such nonesense

Why not? Its a product like any other. If there is sufficient demand, a business tends to provide the product. Its how business work, if they can make money out of Islamic finances, why shouldn't they? Or are you against business making money?

Hobbes

Moe, prehaps you would like to expand on your knowledge of the Islamic banking system to point out the flaws that you believe are in it.

moe_sizlak

the banks should not make exception for one particular demographic due to there religous beliefs , if interests rates return to what they were in this country 20 yrs ago , why should muslims be excluded from paying 20% interest

wes

moe_sizlak wrote: »

the banks should not make exception for one particular demographic due to there religous beliefs , if interests rates return to what they were in this country 20 yrs ago , why should muslims be excluded from paying 20% interest

Its a different banking product, thats it. Muslim won't be exempt from anything, all there doing is purchasing a different product. If a bank wants to enter this niche market, I don't see why they can't? If there is a demand for it, they will provide. Also, I doubt the bank will stop non-Muslims from buying the same product btw.

What you talking about is pure rubbish. A Muslim getting a different type of banking product doesn't hurt anyone. The bank gets to make money and the Muslim gets to engage in Islamic banking. Looks like a win win for me.

Honestly, if people want to make money by catering to a particular groups religious beliefs, why not? This is how capitalism works, if someone can make money from Islamic banking, you can be sure they will do so.

If there is no money to be made from it, then no will provide the product. Simple as that.

Banks providing Islamic banking facilities aren't doing it for Muslims, there doing it because they think they can make some money out of a niche market.

BuffyBot

moe_sizlak wrote: »

the banks should not make exception for one particular demographic due to there religous beliefs , if interests rates return to what they were in this country 20 yrs ago , why should muslims be excluded from paying 20% interest

As explained, it's not an "exception", just a different way of doing business. Maybe you should research the concepts behind Islamic finance first?

Hobbes

Probably someone can explain better but as I recall the banks basically wont invest in stuff that is offensive to muslims (like alcohol). Also that they don't morgage stuff, instead they would buy the house and then sell it to the person who wanted the house at a slight profit (which would make current rates afair).

Probably some other stuff as well.

GUIGuy

Well my understanding is that there isn't anything fundamentally different in it... I'd welcome it as it would give everyone increased options. I know of people of many religions and none that use Islamic banking because of the security it provides.
In practise (in Malaysia at least) it is little different to conventional banking... Some of the products are like hire purchase, some are ironically very like a 'fixed rate interest only mortgage' except that the monthly charge is not called "interest" and it is fixed not variable.
However, to protect themselves from variable interest rates in the commercial money markets banks do generally charge far more this.

The interesting part is not the the financing terms or the marketing. I'm more inerested to know about property rights at various stages of the contract and the penalties of falling behind, or the implications of marital breakup. If you are in effect renting or hire-purchasing with an option to buy at the end then how would family law courts deal with that?

the_new_mr

I honestly have no idea. I'm a total novice when it comes to the banking world let alone the intricacies of Sharia banking.

Interesting to note though that Sheikh Ali Gumaa, the Mufti of Egypt said somewhat recently in a television interview that interest was actually halal (permissible) in Sharia law. He made the point that ribba (usury) is when someone is taking financial advantage of someone else in loaning them money. Like a loan shark lending someone 10 euro today because they need to eat but wanting them 20 the next day. The question here is: At what point does a money loan become exploitation of that kind?

As for the idea of mortgage, the way I see it, it's a business deal between you and the bank and you can either accept it or not. The fear of dealing in usury in a lot of Islamic countries puts a lot of people in financial difficulty unnecessarily. According to Ali Gumaa (a man who holds a degree in Commerce), the whole financial world needs to be re-examined from an Islamic point of view and the terminologies need to be sorted out to avoid misconceptions and misunderstandings so that people can finally know what's okay and what's not.

hivizman

Lloyds TSB's shari'ah-compliant home finance is provided by ABC International Bank plc, working in collaboration with the Bank of Ireland. The structure of the transaction is that the home purchaser and the bank jointly purchase the home - this is known as a musharaka or partnership transaction. The purchaser also enters into a lease agreement - ijara - in respect of the bank's share of the property. The purchaser then makes monthly payments made up of (1) rent on the bank's share of the property, (2) purchase of part of the bank's share in the property, and (3) rent to cover insurance on the property. Each month, the purchaser's share of the property increases and the bank's share decreases, so the partnership is referred to as a diminishing musharaka.

The key issue is how the rent is determined. In the case of the Lloyds TSB arrangement, it is calculated by multiplying whatever happens to be the bank's remaining share of the property by the property's total original cost, then multiplying this by the monthly equivalent of the London Inter-Bank Offered Rate (LIBOR) plus a margin reflecting the credit-worthiness of the borrower. The LIBOR rate is fixed for six-month periods. This rent is not interest (though it is calculated in exactly the same way as interest on a conventional mortgage) - the website describing this transaction, http://www.alburaq.co.uk/homefinance.asp, notes that LIBOR is being used as an external and objective benchmark for determining the rent payable under the lease contract, but the payment to the bank is still rent, not interest.

A recent criticism of the interpretation of the prohibition of riba in the Qur'an and Hadith has been provided by Muhammad Saleem in a short book Islamic Banking - A $300 Billion Deception. Saleem argues that the transactions forbidden in the Qur'an were oppressive - a common form of loan involved the lender being advanced some money or other resource and required to repay it after a given time period; if the borrower could not repay the original amount, then the loan period was extended but the amount of the loan was doubled. The Qur'an refers to this in Sura Al-Imran (3:130 - Yusuf Ali translation of meaning): O ye who believe! Devour not Usury, doubled and multiplied; but fear Allah; that ye may (really) prosper. However, Saleem claims, the concept of riba does not apply to the non-oppressive loans for home purchase or productive business activities that are more familiar in modern times.

There is a big debate going on about whether a significant part of the currently available shari'ah-compliant finance is simply a use of artificial structures to mask an interest-based economic reality, but Islamic home finance has been given a boost in the UK recently by some tax law changes that have reduced the transaction costs involved. The irony is that the Islamic home finance is now regarded in UK tax law as in substance the same as a repayment mortgage, which is of course interest-based.

InOffice

It is the main aim of bank to make money and therefore profile.(no ****). They give you money, they will want a fee for it. I think a shovels and shovel but some ppl call it a spade, it's not nonesensal or crasy.

A bank can lend you a loan of 100 @ 10% interest or give you 100 for a fee of 10 euros. But if you lent 1000 @ 10% and still charged a fee of 10 euros for 1000, well banks wouldn't make as good money and ppl might go made borrowing money. An Economist would have a fit in a world with out proportional results & inputs.

Moe, if a person gets a fixed interest loan at 3.5% for the term of the loan; and some one gets varible loan at the same time but for most of loan interest is at 20%. Is that unfair????

I didn't 100% get why "interest" is band in the first place or is it a problem to lend money?

InOffice

Oh, and you "working lunch" recommended sahara investments, not only because there ethical but because there blue chip.

InFront

I was speaking about this with one of my brothers recently who brought up the interesting point that not only is "islamic finance" often just the very same method of charging interest dressed up in a different fashion, but also it is usually more expensive as a means of obtaining finance. That makes this method just the same in principle, except more extortionate, which presumably makes it more wrong?

Anyway, I can't see myself justifying paying the money that houses tend to be valued for in this country at the moment, so even when that time does come, I'll probably rent:)

gillyfromlyre

sharia compliant financing sounds great and I can't see it being biased one way or the other, its a free market he he

KIVES

As far as I'm aware,in Ireland, Religion and Politics are separate entities and so it follows that Finance and Religion are the same - your chances of finding a sharia compliant financing institution in Ireland are remote...and so it should be in all honesty

InOffice

KIVES wrote: »

As far as I'm aware,in Ireland, Religion and Politics are separate entities and so it follows that Finance and Religion are the same - your chances of finding a sharia compliant financing institution in Ireland are remote...and so it should be in all honesty

I disagree, if people wish to invest there money (as you see it) badly, then there is not reason why not. That's how others make there money. Besides a good Idea is a good Idea no matter where it comes from.

Oh, and the reason you (Europe) have a finance system, philosophy, medican, maths, and the list go on is because the Muslims kept it alive and developed it. Just because you choose not to read about what was happening in other parts of the world when Europe was in the Dark age is not my fault. What do you think sparked the renaissance, did you not think it funny after Rome & Greece were sacked, that suddenly the knowledge came out of the sky.

gillyfromlyre

InOffice wrote: »

Oh, and the reason you (Europe) have a finance system, philosophy, medican, maths, and the list go on is because the Muslims kept it alive and developed it. Just because you choose not to read about what was happening in other parts of the world when Europe was in the Dark age is not my fault. What do you think sparked the renaissance, did you not think it funny after Rome & Greece were sacked, that suddenly the knowledge came out of the sky.

I'd prefer you didn't insult Europe Mr, and how tell me did Muslims spark the renaissance, other than being depicted as being at war in most paintings they featured in from this period. Our law, math and medicine are derivatives of Roman and Greek enterprise

Frank Grimes

gillyfromlyre wrote: »

I'd prefer you didn't insult Europe Mr, and how tell me did Muslims spark the renaissance, other than being depicted as being at war in most paintings they featured in from this period. Our law, math and medicine are derivatives of Roman and Greek enterprise

The reason most of that knowledge reached Europe was due to Muslims and others in Muslim countries transmitting and expanding upon it. Read up on Muslim Spain, especially regarding medicine and philosophy, before trying to jump down that poster's throat.

gillyfromlyre

It was mainly Greek and Roman knowledge, some of the mathematics came from the Muslims, mainly the Muslims preserved European works so credit where credits due, but as for the essence of the renaissance, the creativity, the art, purely European in nature.

Frank Grimes

gillyfromlyre wrote: »

It was mainly Greek and Roman knowledge, a lot of the mathematics came from the Muslims, mainly the Muslims preserved European works so credit where credits due, but as for the essence of the renaissance, the creativity, the art, purely European in nature.

Advances in mathematics, medicine, philosophy, astronomy, navigation etc. etc. They didn't just preserve the knowledge, they expanded and improved upon it. Just because they didn't paint nice pictures doesn't mean they didn't contribute to the formation of modern Western society.
Also, it's possible that poster was referring to the 12th Century renaissance rather than the one you're thinking of.

gillyfromlyre

Theres only one renaissance worth speaking of, if what you say is correct, most Muslims don't seem too pleased with the results of their efforts, "the formation of modern Western society"

gillyfromlyre

Muslims took a lot of their maths and astronomy from India and China

cazzy

Hi - Ive heard of banks doing special mortgages for religious groups in the past (Dont want to name the bank or religious group). Say for example a bank branch near the mosque may have its own variant mortgage so it may be restricted to a few branches.
Best way to find out is to call the head office of the mortgage providers and big banks and ask to speak to the mortgage dept and ask them if any of their branches do one.