(Ahlul Bayt News Agency) -"Many non-Muslims choose Islamic banking products because they like knowing that their funds will never be invested in industries that are potentially negative for society, such as alcohol, tobacco, gambling and pornography,” Arrie Rautenbach, head of retail markets at Absa bank, told Business Live.
Trying to get a share of the booming Islamic banking industry, several South African banks are offering Shari`ah-compliant services, such as the First National Bank and ABSA bank.
The South African National Treasury has also announced plans to introduce Islamic bonds as part of efforts to get a share of the booming industry.
Over the past few months, the number of South Africans using Shari`ah-complaint banking products has remarkably increased to exceed 100,000 citizens.
The new Shari`ah-compliant services are available to all customers, regardless of their religion.
"Any company - small, medium or large - that chooses an alternative to conventional banking can make use of the Islamic business bank offering," said Rautenbach.
"During June the Islamic Forward Exchange Contract [FEC] from Absa Capital will be launched to support international trade by Islamic banking customers. Support for companies wishing to do international business is a current focus and products in the pipeline include a unique working capital solution and letters of credit, which will be Shari`ah-compliant."
Islam forbids Muslims from usury, receiving or paying interest on loans.
Transactions by Islamic banks must be backed by real assets -- not shady repackaged subprime mortgages and banks cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.