SHAFAQNA- Vienna-based BAWAG P.S.K. said it will offer current accounts that adhere to Shariah law, which prohibits the charging of interest or making money on savings.
The Islamic law also prevents adherent banks from dealing with businesses that are considered sinful, or un-Islamic. These include any that deal with alcohol, weapons, or gambling.Banks get around laws on “usury” by lending money without interest fees, but encourage patrons to pay back money borrowed in installments instead.
The bank’s decision has not come without criticism. A barrage of complaints followed BAWAG’s statement on its Facebook page, by people who felt Islamic customers would get preferential treatment.
However, the Austrian bank noted that anyone, regardless of creed, can open up a Shariah bank account if they believe it will give them a financial advantage.
The UK has long been an important finance center for Islamic banking. Lloyds offer an Islamic current account, and at the al-Rayan bank – formerly known as the Islamic Bank of Great Britain – profits have been rising for the last 18 months.
Speaking to The Independent, Mohammad Khan, head of Islamic finance at the PwC, explained how a Shariah account is established: “There has to be no interest involved and it has to be extremely transparent. It has to be really clear where all the fees are.”
He said: “To qualify, a Shariah board has to sign it off; that’s where at least three Islamic scholars look at the product, its marketing, its terms and conditions, and its fees.”
Islam is Austria’s second largest religion and BAWAG PSK has said its target audience are the 600,000 Muslims living in the country.