Search the Internet          Tips  Sites: Finance, Investment

Striking gold the Shariah way

Dharam Shourie in New York

With census figures showing Islam to be the fastest growing religion in the US, investment firms and banking institutions are scrambling to find stocks and schemes which are compliant with the Shariah.

In an article captioned Finding Allah, Striking Gold, the Business 2.0 reports that over 170 financial institutions managing upwards of $175 billion worldwide offer banking or investment services in keeping with Shariah.

The magazine quotes the Bahrain Institute of Banking and Finance as saying that the value of Islamic funds are growing 15 per cent annually as banks such as HSBC and Citigroup revise their loan schemes.

HSBC reportedly is planning to restructure US Islamic clients' loans, deposits and credit cards to ensure Shariah compliance.

For example, in a home loan it would avoid interest-bearing agreements by buying the home and having the client pay the bank at an agreed-upon profit.

The Islamic law forbids acquisition of stocks in companies that charge interest. Trading, margin trading and short selling are also prohibited.

But still many other opportunities remain, it says.

Online Islamic stock-trading sites such as iHilal.com and competing site Islamiq.com maintain Shariah boards of Islamic experts who screen companies and stocks.

The boards also give advice to potential investors on finance Islam-style and ways to 'purify' a portfolio by donating profit from interest and dividends to charity, says the report.

iHilal.com operates three Shariah-compliant mutual funds holding over 1,000 stocks, all listed on the new Dow Jones Islamic market.

Soon these online trading sites, it says, hope to give banks a run for their money by offering Islamic insurance, mortgages and pensions.

Tell us what you think of this report