ihiBlog: Sheikh Usmani’s opinion on sukuk: “Sheikh Yusuf deLorenzo, a prominent Shari’ah scholar, translated the opinion of Sheikh Taqi Usmani on the permissibility of many forms of sukuk into English. One form of sukuk that Sheikh Usmani focused was the requirement that the underlying assets be purchased at face value, not market value, and also that payments to the sukuk holders be linked to an interest rate. The main problem with linking sukuk returns to the interest rate is that the structure forced the manager of the enterprise to make an interest-free loan to investors if profits fell below the benchmark interest rate that would be repaid when profits were higher or at the time of asset repurchase. Sheikh Usmani believes that instead of benchmarking payments to investors and managers of sukuk-financed enterprises, these payments should vary based on the profitability of the business. “

U.S. banks ‘missing a trick’ with Muslim customers - CNN.com: “When it comes to Sharia-compliant banking, few Western countries can compete with Britain. One of the world’s prime financial centers, the City of London is also the key Western hub for Islamic banking.
The Islamic Bank of Britain

The IBB opened its doors in 2004 and became the UK’s first and only standalone Islamic high street bank.

With 23 banks, nine fund managers and a number of international law firms offering Islamic finance in the City, by 2006 British Sharia-compliant assets were thought to be in the region of $22 billion.

The global industry has trebled in the past decade and is now worth around $531 billion.

Britain is also in the vanguard when it comes to Sharia-compliant retail banking, catering for its population of approximately three million Muslims.

In 2004, the Islamic Bank of Britain (IBB) opened its doors for the first time, becoming the UK’s first and only standalone Islamic high street bank.

A number of Britain’s ‘big five’ high street banks are getting in on the act. Lloyds TSB and HSBC offer Islamic banking, including mortgages, current accounts and trust funds for children.

In the retail market, Britain is the only European country that offers government-authorized Islamic banking products.

In the United States, only regional banks like University Bank, Michigan offer Sharia-compliant products.”

(Via .)

Religioscope: Religion and money: Islamic finance: “Islamic finance is on the rise in what in many parts of the world can be called an anti-Sharia age, and it has been proven compatible with Western financial systems and legislation. But challenges have still to be faced. “

Banks Springing Up to Serve the Underserved - New York Times: “Similarly, many of the nation’s almost five million Muslims have special banking concerns that often go unaddressed by mainstream banks. In particular, Sharia, Islamic law, forbids the charging or paying of interest. ‘This hampers most bank transactions,’ said Amjad Quadri, assistant vice president for business development and new markets at the University Islamic Financial Corporation, a bank based in Ann Arbor, Mich. As a result, many Muslims decide to rent rather than buy homes. ‘And most Muslims only have interest-free checking accounts and credit cards that they pay off at the end of the month,’ Mr. Quadri said.

To accommodate special concerns of Muslims, University Islamic, with additional offices in East Brunswick, N.J., and McLean, Va., offers rent-to-own agreements for home buyers, along with savings accounts that offer ‘profit sharing’ rather than interest. (The bank’s profit-sharing rates are competitive with those at other financial institutions.)

This profit-sharing strategy has enabled Haaris Ahmad, a lawyer in Canton, Mich., to earn money in a money market account for the first time. ‘Now, my wife and I get the same benefits that other people have, but in a way that’s compliant with our faith requirements,’ Mr. Ahmad said.”

Islamic bonds hit by scholar - - The Washington Times, America’s Newspaper

The booming market for financial products that comply with Islamic law was thrown for a loop recently by criticism from a leading scholar, who has set off a debate about whether the industry has sacrificed religious principles for the sake of growth at a time of surging Middle East oil revenue.Shariah, or Islamic law, prohibits charging or paying interest, so bankers and lawyers have developed a rapidly growing financial market by restructuring conventional products like bonds to make them compliant with Islam. Shariah-compliant products attempt to replicate the concept of interest through cost-plus transactions, leasing arrangements or by linking payments to returns on underlying assets. The process is normally blessed by a board of religious scholars affiliated with a bank.

However, one of the world’s leading Shariah-finance scholars recently rattled the market by saying 85 percent of Islamic bonds, or sukuk, are not Shariah-compliant. Sheik Mohammed Taqi Usmani argued that, in essence, they were structured too much like conventional bonds… [read on]