Lloyds TSB To Offer Sharia Law Compliant Business Accounts
While UK based banks Lloyds TSB and HSBC have been offering personal accounts administered in line with Sharia Law for some time, Lloyds TSB are the first to announce business accounts which meet the requirements of the Muslim law.
Under Sharia Law interest payments are not allowed to be charged, nor can they be received on funds held in a bank account. The Banks are also forbidden from investing the funds held in these accounts into areas of business deemed unethical by the Muslim body of law - e.g. Tobacco, Gambling, Alcohol, etc.
Many people may be unaware that there are some 1.8 million Muslims in the UK, with the majority banking outside of the UK mainstream banking sector in order to comply with Sharia Law. There are also 10,000 Muslim owned businesses which have struggled to find Sharia Compliant accounts in the past.
The news that Lloyds TSB will be offering the new accounts in all branches has been welcomed, however some people are still to be convinced that the funds in question can be “ring fenced†from unethical investments. Even though all funds will be held in non interest bearing accounts, we are still awaiting confirmation of the charging structure for these new arrangements.
Now that Lloyds TSB have chosen to move into the traditional Muslim business banking arena, it would seem only a matter of time before further UK clearing banks converge of the sector. While Lloyds TSB are looking forward to substantial business in the new accounts, it remains to be seen what the actual take up rate will be like.
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