Personal Banking at the Islamic Bank of Britain

The Islamic Bank of Britain has offered Sharia compliant products since its opening in 2004 and is regulated by the Financial Services Authority. The bank is also a full member of the FSCS, the Financial Services Compensation Scheme, which guarantees the first 100 per cent of savings up to £85,000. Established to service the Muslim population which requires banking services that do not involve riba (interest), non Muslims are equally well served by choosing personal banking with the Islamic Bank of Britain.

One of the advantages of choosing a personal account with IBB is the ethical standards which it applies to all investment vehicles. Anyone concerned about the type of investments which banks make can be assured that BBI does not invest in any companies associated with tobacco, alcohol, drugs and armaments.

IBB offers a branch based network, telephone and postal banking services, and a newly launched internet banking service. A branch counter fee of £2.00 is applied, but waived for bank customers who maintain a current account balance of above £1,500 or a savings balance above £5,000, in the previous month.

As the principles of Islamic law strictly forbid the charging or paying of interest, Sharia compliancy is obtained by the bank sharing profits on investments. Savings accounts are offered which show an expected profit return, which is then taxed at the usual rates applied to savings accounts. The profit amount shared is not guaranteed, just as savings accounts with variable interest rates cannot guarantee a fixed return.

Expected profits rise on a sliding scale, moving from a low 0.10% for a fixed term deposit account of three months, to 2% on a fixed term deposit account of two years. The savings accounts work on the same principle as Islamic Takaful insurance in the way in which generated profits are shared, but the bank does not offer a Takaful insurance product at the current time.

Halal mortgage alternatives are also available from the Islamic Bank of Britain and conform to Sharia. Islamic mortgages are referred to as Home Purchase plans and are “based on the accepted and widely used Islamic financing principles of Ijara (leasing) and Diminishing Musharaka (reducing partnership).”

Halal mortgages require the home buyer to either lease or agree to repay the bank for the portion of the purchase price that the bank has contributed. If the latter then the homeowner builds equity as payments are made to the bank. No interest is paid to the bank under the Halal terms.

Unlike some conventional banks which offer Sharia products alongside standard bank accounts, the Islamic Bank of Britain only offers Sharia compliant products in keeping with its firm principles. As the demand for Islamic banking services increases across the world its benefits to non Muslims as well as Muslims offer an attractive banking alternative.