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Australia to Get First Shari`ah-Compliant Bank in 2021

Islamic finance has grown substantially in recent decades across the world.

In Australia, one of the world’s largest halal food exporters, the Islamic finance industry, will soon get a boost with the launch of the first full-fledged retail Islamic bank.

The new Islamic Bank Australia (IBA) will receive its license early 2021, according to chief executive officer Dean Gillespie, Salaam Gateway reported.

📚 Read Also: What is the Difference Between Islamic Loan and Riba?

The IBA started back in 2012 by a group of Australian Muslims. However, the project really got going in 2017 and 2018.

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A group of Australian Muslim investors provided 50% of the capital while the other half is from an undisclosed investor based in the UAE. IBA’s seed capital was AUS$20 million ($14.6 million).

“COVID was an unexpected delay but we are working towards obtaining the license and our launch,” Gillespie told Salaam Gateway. “As well as that we are planning to on-board customers. We have a strong waiting list.”

In addition to online bank services, IBA plans to open a physical branch in Sydney, New South Wales.

“We will offer retail term deposits as well as home financing via murabahah and diminishing musharakah,” said Gillespie, who is the former head of loan sales at Commonwealth Bank and head of mortgages at Bankwest. “Longer term, we plan to offer SME financing.”

Australia to Get First Shari`ah-Compliant Bank in 2021 - About Islam

Target Customers

The new Islamic bank targets Australia’s growing Muslim population as the core of its customers.

Muslims made up 2.6% of the population of 26 million, according to the last census in 2016. This was up from 2.2% in the 2011 census.

“This is likely to increase to 3% in the next census in 2021. Adding to this, around 40% of the Muslim population are born in Australia. Around 60% are immigrants,” said Gillespie.

“As well as Muslims, we are looking to target ethical customers who are discontent with existing lenders,” he added.

IBA has already started branding itself as “Australia’s ethical bank for Muslim Australians.”

“We will carve off portions of profits for ESG causes like planting trees,” he said.

Islamic banks and finance institutions 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.

The global Islamic banking market covers different aspects, like Islamic Banking, Takaful: Islamic Insurance, Sukuk: Islamic Bonds, and Shari`ah Capital Market: Islamic funds.