Muslims in North America probe growing Islamic financial sector

Global leaders in Islamic finance have met in Toronto to probe the growing but still under-explored world of financial products and services that comply with Shariah, or Islamic law.

The Usury-Free Association of North America conference on March 30 and 31 brings together more than 150 experts from a dozen countries to
explore a wide range of services that abide by Islam’s prohibition on
interest.

Conference organizers say the potential of the global Islamic financial
market is an estimated US$500 billion, Religion News Service Reports.

Islamic scholars, lawyers and financial experts from the United States,
Canada, Britain and several Middle East countries are looking at
Shariah-compliant stocks and investment products, banking, equity funds,
mortgages, and credit.

Canada’s first Shariah-compliant credit card, the iFreedom Plus
MasterCard, will be launched at the conference.

Though there have been great strides in Islamic banking and financial
services, particularly in Britain, “supply is definitely not keeping up
with demand” outside the Muslim world, says conference spokesman John
Qubti. “A lot of Muslims keep their money under their
mattress. They’re just not investing.”

Under Shariah, charging or paying interest (“riba”) is usury and
considered “haram,” or forbidden. That means conventional savings
accounts, credit cards and interest-bearing investments are off-limits
for observant Muslims.

So are investments in any sector associated with gambling, alcohol,
pork, tobacco, weapons or pornography, or one that assumes an unduly
high level of risk. Financial speculation is also enjoined.

The Islamic financial model is based on risk sharing. For example,
Islamic mortgages work by having the lender either buy the home or
become an equity partner in its purchase. The homeowner then pays
monthly “rent” along with principal payments based on fair but
competitive rates. The arrangement is based on trade and profit, both
permissible.

“Making money is not a sin in Islam,” Qubti said.

Worldwide, both the Dow Jones Islamic Fund, launched in 2000, and the
Dow Jones Islamic Market Index, begun in 1999, offer Shariah-compliant
investments.

A recent report for Canada’s national housing agency said Islamic
mortgages and other Shariah-compliant financial products would pose no
problems with civil law.