Specialized Banking Options for Muslims Allow Local Lenders to Expand

January 17, 2006

Source: CNN Money


On January 17, 2006 CNN Money reported, "In the quest to find new and profitable ways to attract consumers, the banking industry has found religion. Islamic banking is emerging as a small but growing trend among lenders in the United States, as niche players create specialized products and services for Muslims that fall within the tenets of Islamic law, or Shari'ah. Shari'ah prohibits investments in the liquor, wine, casino, pornography, gambling and pork processing industries, and forbids Muslims from accepting or paying interest -- a challenge for Western banks that are based in the interest-paying system. Currently there are three banks that offer Islamic banking in the U.S., including international giant HSBC... Banks such as Ann Arbor, Mich.-based University Bank, a wholly owned subsidiary of holding company University Bancorp, are willing to put in the extra work to create banking alternatives that appeal to the growing market... University Bank recently formed the University Islamic Financial Corp., a subsidiary that offers Muslims home financing, deposit accounts and Islamic mutual fund shares. The bank's deposit accounts allow Muslims to open accounts where any profits are shared with customers rather than paid as interest."