Australian Politics Forum - Australia's First Sharia-compliant Bank

AusGeoff

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Australia's First Sharia-compliant Bank
Oct 12^th, 2022 at 7:04am

Islamic fundamentalists in Australia with aspirations of owning
a home could soon be realised, after the Australian Prudential
Regulation Authority (APRA) granted the country's first Islamic
bank a restricted license which complies with Sharia law.

Islamic Bank Australia will test its products including home finance,
savings and everyday accounts with a small number of customers,
with a view to launching publicly.

Associate Professor Mehmet Ozalp, from Charles Sturt University's
Centre for Islamic Studies, said Islam forbids paying or receiving
interest as it's "impossible to be fair" in a transaction.

Although Ozalp said some Muslims may choose not to adhere to
provisions against interest. "Some Muslims don't mind...they go
straight to the conventional banks. They don't care if it's prohibited
or not," he said.

As I've said before, this is nothing more than a very subtle but
insidious attempt to introduce, at the least, some form of officially
sanctioned Sharia law into a nominally secular country like Australia.

Religion in and of itself—of any colour—should play no part in commerce
or the economics of the country. As a practicing Jew or a Catholic, or
even a declared atheist, would I be permitted to take out an Islamic
home loan on the proviso that I declare my support of the prevailing
Sharia law?

Or is this the thin end of the wedge. Angry

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Belgarion

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Re: Australia's First Sharia-compliant Bank
Reply #1 - Oct 12^th, 2022 at 8:51am

This system of banking has been operating in Islamic communities in Australia for decades, run by community leaders and others with contacts to banks in Islamic countries. In essence the loan is interest free from one person to another, who in return will give that person a gift as thanks for lending them money.

As to whether it should become an officially recognised and licensed practice here in Australia, I can see problems if this new bank discriminates against people due to their religion.

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Bias_2012 Gold Member Offline Australian Politics Posts: 10766 Gender:	Re: Australia's First Sharia-compliant Bank Reply #2 - Oct 12^th, 2022 at 8:59am It's only for muslims, it's not for infidels like you or me ... it's discriminatory. You won't get any lefties posting in here because they'll say "It's the one time when it's it's OK to discriminate"
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Frank

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Re: Australia's First Sharia-compliant Bank
Reply #3 - Oct 12^th, 2022 at 9:41am

Belgarion wrote on Oct 12^th, 2022 at 8:51am:

This system of banking has been operating in Islamic communities in Australia for decades, run by community leaders and others with contacts to banks in Islamic countries. In essence the loan is interest free from one person to another, who in return will give that person a gift as thanks for lending them money.

As to whether it should become an officially recognised and licensed practice here in Australia, I can see problems if this new bank discriminates against people due to their religion.

It's a workaround, like so much of Islamic reasoning.

The bank doesn't lend you the money at interest to buy a house. Instead, it buys the house and sells it to to you, payable in instalments which in the end will mean you will pay cost plus service fee (ie interest). Exactly as it happens with any other bank and just as profitable to the bank but don't CALL it interest.

It's a rule like which foot to put first when entering the lav, and how many shakes of the pisser are permitted. But in the end you will still empty your bladder.

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Bias_2012

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Re: Australia's First Sharia-compliant Bank
Reply #4 - Oct 12^th, 2022 at 9:56am

Term deposits

Traditional term deposits in Australia are a secure mode of investment that earns you interest over a period.

The Australian Islamic Bank’s term deposits desist earning interest. Rather, they adhere to Mudarabah principles and earn money by profit shares. Term deposits are obtainable from 1 to 12 months, and an automated rollover feature that sets money back in term deposits when it reaches its maturity date.

With reference to profit sharing, depositors’ funds are put into

ethical profit-producing activities

and any profits generated are shared with customers. As per the bank’s website, the original deposit amount would be guaranteed, but the actual profit returned over the term may differ.

https://www.theglobaleconomics.com/2022/07/15/australia-islamic-bank/?amp

They don't charge interest for ethical reasons, but still rake in profits, probably from infidels

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AusGeoff

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Re: Australia's First Sharia-compliant Bank
Reply #5 - Oct 12^th, 2022 at 11:52am

Forty-plus years ago, the Victorian Housing Commission had
a similar rent-to-buy scheme for the renters of state housing.

In other words, the rent you paid went towards ultimately
purchasing the property, presuming you stayed there long
enough of course. Back in the day, most of those renters
would stay for at least a decade or two, plus enjoy controlled
rent, and usually bringing up young families. It was all about
stability, and affordable accommodation for young or socially
disadvantaged couples.

Will this Islamic scheme turn out to be discriminatory? If not,
what will the conventional lenders' attitudes be?

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polite_gandalf

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Re: Australia's First Sharia-compliant Bank
Reply #6 - Oct 13^th, 2022 at 10:55am

Quote:

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

LOL - literally no meaningful difference to regular interest mortages.

The bank is presumably free to adjust the "rent" whenever they like - thus making it no different to variable interest rates.

The Quranic injunction is against excessive interest, not interest per se. I'm looking at ruthless so called 'pay-day lenders'. No Islamist would deny that borrowers should be able get some financial benefit from borrowing. So any scheme they come up with is simply interest-in-another-name.

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A resident Islam critic who claims to represent western values said:
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Outlawing the enemy's uniform - hijab, islamic beard - is not depriving one's own people of their freedoms.

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Bias_2012

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Re: Australia's First Sharia-compliant Bank
Reply #7 - Oct 13^th, 2022 at 2:45pm

polite_gandalf wrote on Oct 13^th, 2022 at 10:55am:

Quote:

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

LOL - literally no meaningful difference to regular interest mortages.

The bank is presumably free to adjust the "rent" whenever they like - thus making it no different to variable interest rates.

The Quranic injunction is against excessive interest, not interest per se. I'm looking at ruthless so called 'pay-day lenders'. No Islamist would deny that borrowers should be able get some financial benefit from borrowing. So any scheme they come up with is simply interest-in-another-name.

Tell the whole story Gandalf ... How does the bank survive if they don't charge interest? (The loans are interest free remember)

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polite_gandalf

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Re: Australia's First Sharia-compliant Bank
Reply #8 - Oct 13^th, 2022 at 2:57pm

Bias_2012 wrote on Oct 13^th, 2022 at 2:45pm:

polite_gandalf wrote on Oct 13^th, 2022 at 10:55am:

Quote:

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

LOL - literally no meaningful difference to regular interest mortages.

The bank is presumably free to adjust the "rent" whenever they like - thus making it no different to variable interest rates.

The Quranic injunction is against excessive interest, not interest per se. I'm looking at ruthless so called 'pay-day lenders'. No Islamist would deny that borrowers should be able get some financial benefit from borrowing. So any scheme they come up with is simply interest-in-another-name.

Tell the whole story Gandalf ... How does the bank survive if they don't charge interest? (The loans are interest free remember)

They charge "rent" - which they admit can be adjusted up. Literally no different to interest.

Rest assured, customers almost certainly end up paying at least as much as any customer of a traditional interest paying mortgage would.

There is one important difference though - the bank won't invest in "non-halal" industries like gambling and alcohol.

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A resident Islam critic who claims to represent western values said:
Quote:

Outlawing the enemy's uniform - hijab, islamic beard - is not depriving one's own people of their freedoms.

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Bias_2012

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Re: Australia's First Sharia-compliant Bank
Reply #9 - Oct 13^th, 2022 at 3:32pm

polite_gandalf wrote on Oct 13^th, 2022 at 2:57pm:

Bias_2012 wrote on Oct 13^th, 2022 at 2:45pm:

polite_gandalf wrote on Oct 13^th, 2022 at 10:55am:

Quote:

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

LOL - literally no meaningful difference to regular interest mortages.

The bank is presumably free to adjust the "rent" whenever they like - thus making it no different to variable interest rates.

The Quranic injunction is against excessive interest, not interest per se. I'm looking at ruthless so called 'pay-day lenders'. No Islamist would deny that borrowers should be able get some financial benefit from borrowing. So any scheme they come up with is simply interest-in-another-name.

Tell the whole story Gandalf ... How does the bank survive if they don't charge interest? (The loans are interest free remember)

They charge "rent" - which they admit can be adjusted up. Literally no different to interest.

Rest assured, customers almost certainly end up paying at least as much as any customer of a traditional interest paying mortgage would.

There is one important difference though - the bank won't invest in "non-halal" industries like gambling and alcohol.

You're trying to pull the wool over our eyes

The bank buys the house, then they inflate the price, and sell it to the customer at that higher amount

Islam condones profit making, so profit is in lieu of interest, the customer pays more than the house was originally advertised for by the real estate agent

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greggerypeccary

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Re: Australia's First Sharia-compliant Bank
Reply #10 - Oct 13^th, 2022 at 3:41pm

Belgarion wrote on Oct 12^th, 2022 at 8:51am:

This system of banking has been operating in Islamic communities in Australia for decades, run by community leaders and others with contacts to banks in Islamic countries. In essence the loan is interest free from one person to another, who in return will give that person a gift as thanks for lending them money.

As to whether it should become an officially recognised and licensed practice here in Australia, I can see problems if this new bank discriminates against people due to their religion.

They don't.

It's a model that has also sparked interest from non-Muslim customers.

"We're constantly getting inquiries from Aussie expats that have lived in the Middle East...and have used Islamic [finance] products," he said.

"They come on to our waiting list and say, 'we just really like the ethical nature of the products'."

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greggerypeccary

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Re: Australia's First Sharia-compliant Bank
Reply #11 - Oct 13^th, 2022 at 3:42pm

Bias_2012 wrote on Oct 13^th, 2022 at 3:32pm:

polite_gandalf wrote on Oct 13^th, 2022 at 2:57pm:

Bias_2012 wrote on Oct 13^th, 2022 at 2:45pm:

polite_gandalf wrote on Oct 13^th, 2022 at 10:55am:

Quote:

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

LOL - literally no meaningful difference to regular interest mortages.

The bank is presumably free to adjust the "rent" whenever they like - thus making it no different to variable interest rates.

The Quranic injunction is against excessive interest, not interest per se. I'm looking at ruthless so called 'pay-day lenders'. No Islamist would deny that borrowers should be able get some financial benefit from borrowing. So any scheme they come up with is simply interest-in-another-name.

Tell the whole story Gandalf ... How does the bank survive if they don't charge interest? (The loans are interest free remember)

They charge "rent" - which they admit can be adjusted up. Literally no different to interest.

Rest assured, customers almost certainly end up paying at least as much as any customer of a traditional interest paying mortgage would.

There is one important difference though - the bank won't invest in "non-halal" industries like gambling and alcohol.

You're trying to pull the wool over our eyes

The bank buys the house, then they inflate the price, and sell it to the customer at that higher amount

Islam condones profit making, so profit is in lieu of interest, the customer pays more than the house was originally advertised for by the real estate agent

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

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polite_gandalf

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Re: Australia's First Sharia-compliant Bank
Reply #12 - Oct 14^th, 2022 at 8:19am

Bias_2012 wrote on Oct 13^th, 2022 at 3:32pm:

polite_gandalf wrote on Oct 13^th, 2022 at 2:57pm:

Bias_2012 wrote on Oct 13^th, 2022 at 2:45pm:

polite_gandalf wrote on Oct 13^th, 2022 at 10:55am:

Quote:

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

LOL - literally no meaningful difference to regular interest mortages.

The bank is presumably free to adjust the "rent" whenever they like - thus making it no different to variable interest rates.

The Quranic injunction is against excessive interest, not interest per se. I'm looking at ruthless so called 'pay-day lenders'. No Islamist would deny that borrowers should be able get some financial benefit from borrowing. So any scheme they come up with is simply interest-in-another-name.

Tell the whole story Gandalf ... How does the bank survive if they don't charge interest? (The loans are interest free remember)

They charge "rent" - which they admit can be adjusted up. Literally no different to interest.

Rest assured, customers almost certainly end up paying at least as much as any customer of a traditional interest paying mortgage would.

There is one important difference though - the bank won't invest in "non-halal" industries like gambling and alcohol.

You're trying to pull the wool over our eyes

The bank buys the house, then they inflate the price, and sell it to the customer at that higher amount

Islam condones profit making, so profit is in lieu of interest, the customer pays more than the house was originally advertised for by the real estate agent

Bit slow are we bias?

I'm not disputing anything you are saying here. Customers are absolutely still paying interest - they just call it something else. This Islamic bank is doing the exact same practice of the regular banks that they label as immoral. And yes, its quite possible customers will end up paying more than they would under a regular loan.

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A resident Islam critic who claims to represent western values said:
Quote:

Outlawing the enemy's uniform - hijab, islamic beard - is not depriving one's own people of their freedoms.

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polite_gandalf

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Re: Australia's First Sharia-compliant Bank
Reply #13 - Oct 14^th, 2022 at 8:37am

greggerypeccary wrote on Oct 13^th, 2022 at 3:42pm:

Islamic Bank Australia CEO Dean Gillespie described the home financing scheme as a "joint ownership model", with customers charged rent while they are living as a tenant in the bank's share of the property, instead of interest.

"[The customer] might start off with a 20 per cent deposit...that means they'd start off owning 20 per cent of the house and the bank would own the other 80 per cent," he said.

"What we allow [the customer] to do is buy more shares of that property over time."

As the customer makes rental payments, their share in the property increases, until they become the full owner.

IBA are scant on the details - but this from a more detailed explanation of sharia compliant home loans in general - which I assume IBA follows:

With an Islamic home loan, technically, your home is owned by you from the beginning. However, it comes with a legal agreement that your Islamic lender is entitled to it. If you default on your home loan, your lender can sell your property and recover the outstanding funds.

https://www.joust.com.au/blog/sharia-home-loans

So this selling point that customers have some ownership of the house from the beginning - is a furphy. You are just as vulnerable to repossession due to payment default - as you are for a regular loan.

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A resident Islam critic who claims to represent western values said:
Quote:

Outlawing the enemy's uniform - hijab, islamic beard - is not depriving one's own people of their freedoms.

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Bias_2012

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Re: Australia's First Sharia-compliant Bank
Reply #14 - Oct 14^th, 2022 at 11:50am

polite_gandalf wrote on Oct 14^th, 2022 at 8:19am:

Bit slow are we bias?

I'm not disputing anything you are saying here. Customers are absolutely still paying interest - they just call it something else. This Islamic bank is doing the exact same practice of the regular banks that they label as immoral. And yes, its quite possible customers will end up paying more than they would under a regular loan.

That's right ... advertising that the loans are "interest free" is nothing more than a gimmick to attract borrowers

In lieu of interest, the bank first buys the property, and then inflates the price before the borrower starts paying the payments

Smart borrowers would inquire if there were tangible benefits borrowing from a Sharia bank rather than from an mainstream bank or building society

And if there were more tangible benefits, what exactly would they be in terms of dollar savings? - there might be very few ... "interest free" means nothing if the borrower has to pay extra for the house (added to it be the Sharia bank)

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