Islamic banking gets nod in Australia

Australia has licensed its first-ever Islamic bank, the Islamic Bank of Australia (IBA). IBA will be the first Australian bank to offer a full suite of retail and business banking services – all without interest and Shariah-compliant for the first time in Australia. After obtaining a Restricted Authorised Deposit-taking Institution (Restricted ADI) authorization from the […]

Australia has licensed its first-ever Islamic bank, the Islamic Bank of Australia (IBA). IBA will be the first Australian bank to offer a full suite of retail and business banking services – all without interest and Shariah-compliant for the first time in Australia.

After obtaining a Restricted Authorised Deposit-taking Institution (Restricted ADI) authorization from the Australian Prudential Regulation Authority (APRA), IBA can now build its systems, implement processes, and test with a small number of customers in 2023.

While IBA is not open for business yet, the license by APRA shows the growing global acceptance of Islamic finance around the world.

The International Monetary Fund (IMF) defines Islamic banking as a financial activity that is Shariah-compliant and applied through the development of Islamic economics.

According to Mordor Intelligence, Islamic banking is the largest sector in the Islamic finance industry, contributing about 69% to the industry’s assets. In 2019, there are 526 Islamic banks, although the number would be significantly higher now. The top three markets of Islamic banking were Iran, Saudi Arabia, and Malaysia.

For Dean Gillespie, IBA CEO, with the number of Muslims in Australia growing by more than 6% every year, IBA is excited to be bringing this new type of banking to the Australian community.

Australia’s Muslim population grew from 2.6% in 2016 to 3.2% of all Australians in the recent 2021 Census. Nearly a million Australians identify as being of the Islamic faith.

“Islamic banks are incredibly popular worldwide because of the ethical way they interact with customers. It’s more like a partnership where both the bank and the customers share the benefits,” commented Gillespie.

Gillespie also said that Islamic banks were inherently ethical, refusing to deal with certain industries.

Meanwhile, Islamic Bank Australia’s Chair, Anthony Wamsteker, said, “this is a big milestone for Australia as it provides choice, introduces diversity in Australian banking products, and provides financial inclusion for the Islamic community.”

Products at Islamic Bank Australia will be endorsed by internationally renowned Islamic scholars to ensure they are Shariah-compliant. (Tech Wire)