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Call for sharia-compliant finance services to be available in Ireland

  • 30-05-2008 7:48pm
    #1
    Eglinton
    Closed Accounts Posts: 992 ✭✭✭


    Could someone explain this to me? http://www.ireland.com/newspaper/frontpage/2008/0530/1212095649941.html

    Is this a justifiable, workable system or an attempt to enforce religion on what should be a secular business practice discriminating solely on ability to repay.

    I'm sitting on the fence for the time being so I want to hear your thoughts.


Comments

  • #2
    Thomas_S_Hunterson
    Closed Accounts Posts: 6,151 ✭✭✭Thomas_S_Hunterson


    It's basically just a different way to structure a mortgage so that interest isn't explicitly charged, but rather obscured in a contract involving dual-ownership and rent.

    I don't think it's enforcing religion at all. Banks can offer these services to make money from a larger consumer base (muslims who would otherwise have to look elsewhere for finance). As far as I know, it is structure in a way such that the finance cost's the same amount.


  • #3
    Bottle_of_Smoke
    Registered Users, Registered Users 2 Posts: 9,770 ✭✭✭Bottle_of_Smoke


    They're not suggesting all loans become Sharia compliant. They're saying banks could make a lot of money from Muslims who want Islamic mortgages.

    Does anyone know how the bank makes a profit on it? is there like an agreed fee they arrange that isn't considered interest?


  • #4
    onedmc
    Registered Users Posts: 455 ✭✭onedmc


    They basically fudge it, calculate an interest rate and then charge as a fee. But its more about the agreement behind the loan than the charges. More like a fair system of merchant banking.

    BOI offer islamic product through ABC bank and Al Barak(a?)


  • #5
    hivizman
    Registered Users, Registered Users 2 Posts: 1,163 ✭✭✭hivizman


    onedmc wrote: »
    They basically fudge it, calculate an interest rate and then charge as a fee. But its more about the agreement behind the loan than the charges. More like a fair system of merchant banking.

    BOI offer islamic product through ABC bank and Al Barak(a?)

    There was a discussion of Islamic finance a few months ago in this forum at http://www.boards.ie/vbulletin/showthread.php?t=2055172521. The "rent" element of the arrangement seems to be calculated by taking a reference market interest rate (such as London Interbank Offered Rate), and adding a profit margin to this. The customer is regarded under Shari'ah as paying rent for the use of the bank's share of the property, and the fact that the rent is calculated by using an interest base rate is not considered to invalidate the transaction.

    In the UK, Gordon Brown, when he was Chancellor of the Exchequer, was keen on developing Islamic finance in the UK, and changed the tax laws to put Islamic housing finance on a level playing field with conventional mortgage finance. I don't know whether there are tax issues in Ireland that would make Islamic finance uncompetitive.


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