In The Name Of Allah The Most Gracious, The Most Merciful

Assalamu alikum Brothers and sisters,

I just read this great news and wanted to share it with you. I would like to know what's your oppinion about it :)

United Kingdom: Banks look to tap potential of Islamic banking

After years of lobbying by Muslims, Islamic finance is heading for the British high-street as mainstream banks look to cash in on a market that analysts say could be worth billions of pounds sterling.

Under Islamic Sharia law, it is forbidden to pay or receive interest, making conventional mortgages (home loans) and bank accounts unsuitable for the estimated 1.5 to 2.0 million Muslims living in Britain.

Now, the banking giant HSBC plans to introduce in Britain later this month a home finance scheme and bank account that meets the tenets of Islamic law, a move welcomed by Muslim leaders.

Under the new scheme, developed by HSBC Amanah Finance, the bank will buy the property outright on the customer’s behalf and lease it back to them for an agreed term -- usually 25 years, the same period as a traditional mortgage.
The customer will then pay a monthly rent instead of interest as well as a contribution towards the price of the property, becoming the official owner of the house after their final payment.

HSBC is the first high street bank in UK to offer such a scheme and Inshalla All other banks will follow the same path. "Ameen"

Source Monday Morning Headlines (http://www.mmorning.com/ArticleC.asp?Article=393&CategoryID=7)
Issue No.1594 Sunday, July 13, 2003
andToday in Business (http://icteesside.icnetwork.co.uk/0400business/0004tod/content_objectid=13134380_method=full_siteid=50080 _headline=-HSBC-offering-Islamic-mortgages-name_page.html) Jul 2 2003.

Thanks for the infomation.
Can you post the source please?

Such a good news indeed....

I would still wanna know more how is this mortgage works, they could play with words sometimes.

well the trend these days for most forgine banks is to head to islamic banking coz ..they general alot of mony from it..specily coz it is appaling to muslims and there is a huge muslimes groupe out there..

this producte that HSBC is lanuching in there is Lanuched here in saudi arabia under the islamic banking producte (AL amanah).

it is based on islamic principl called altawarq which is that bank buy something and sell it to the cusomter back at higher price so to make interest as 7allal process...instead of paying intereste it is said that u are buying somthing and does not matter if it is at high price...which fits with islamic shri3ah.

and now most forgine banks are headding towards this and i have heared that national commerical banks here in ksa is about to issue an indes in NYSEC for islamic funds...and some banks here are headding to change from tradtional banking to islamic banking .

really intresting topic Ayah .. Thanx

well, I am happy to hear that some conventional banks are moving to Islamic banking .. though they might not be perfectly Islamic first, but with the practice of many Islamic banking all banks might emerge into "real Islamic banks". Its great they chose an Islamic organization as a partner .. this way it would be easier for them to understand the concepts.

I think it is a booby trap....

My brother told me about this just a month ago.....

It is quite a good system, i will get clearer details to explain to people like seham who have their doubts ;)

I would not look for this to become a wide speard practice in the world wide banking industry. For the bank it's really high risk and a prescription for bankruptcy.

In order to do this the bank has to tie up much of it's available cash or go out and borrow the money itself which would add debt to it's own balance sheet.

Originally posted by Ayah

The customer will then pay a monthly rent instead of interest as well as a contribution towards the price of the property, becoming the official owner of the house after their final payment.



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ur lieing to ur self......I mean whats the differnce.......u will end up paying the same amount.

HSBC have had a separate Islamic banking business for a few years now. It;s only the launch in the UK that is new.

In order to meet Islamic banking requirements, it has to operate pretty much entirely separatey from the rest of the bank.

Most international banks have this now. Funnily enough, some of the khaleeji banks still do not have such a business - ony conventional "usury"!!!!

Originally posted by qais
ur lieing to ur self......I mean whats the differnce.......u will end up paying the same amount.

No we are not.. Let me just explaine some points in Islamic banking.

The best known feature of Islamic banking is the prohibition on interest. The Qur'an forbids the charging of Riba on money lent. It is important to understand certain principles of Islam that underpin Islamic finance.

The rules regarding Islamic finance are quite simple and can be summed up as follows:

a) Any predetermined payment over and above the actual amount of principal is prohibited.

b) The lender must share in the profits or losses arising out of the enterprise for which the money was lent.

c) Making money from money is not Islamically acceptable.

d) Gharar (Uncertainty, Risk or Speculation) is also prohibited.

e) Investments should only support practices or products that are not forbidden -or even discouraged- by Islam.

So when you decied to buy a house and pay it as a monthly rent you'll know exactly the final amount you are sppose to pay but when you borrow for example RO 50,000 you wont end up paying it as it is but with interest that will keep on increasing each year.

In Surat elbaqara (The Cow) [2:275]

http://12.234.87.231/ayaimage/2_275.gif

"Those who swallow down usury cannot arise except as one whom Shaitan has prostrated by (his) touch does rise. That is because they say, trading is only like usury; and Allah has allowed trading and forbidden usury. To whomsoever then the admonition has come from his Lord, then he desists, he shall have what has already passed, and his affair is in the hands of Allah; and whoever returns (to it)-- these arc the inmates of the fire; they shall abide in it."


For more information please check Principles of Islamic Banking (http://www.usc.edu/dept/MSA/economics/nbank1.html)

So when you decied to buy a house and pay it as a monthly rent you'll know exactly the final amount you are sppose to pay but when you borrow for example RO 50,000 you wont end up paying it as it is but with interest that will keep on increasing each year. The bank will have to borrow the money and it won't be interest free, to make the house available for you to rent to own. Interest will still be involved in the transaction, which is still forbidden, is it not?

Jack, that's not correct. The bank doesn't "borrow" money and pay interest, it uses the money from account holders' deposits, and pays them no interest.