Islamic banks have become an integral part of the financial system in many Muslim-majority countries, as well as in nations with sizeable Muslim minorities such as the United Kingdom, South Africa, Sri Lanka and Thailand.
Australia is poised to join them. From mid-2024, Islamic Bank Australia is set to offer Australia’s 813,000 Muslims a banking service aligned with their religion’s strictures against profiting from interest or investing in harmful industries such as alcohol or gambling.
The fundamental distinguishing feature of an Islamic bank is its adherence to Islamic, or Sharia, law. As such, Islamic banks differ from their counterparts in four main ways: they do not charge or pay interest; they don’t engage in property speculation or activities such as derivatives trading; they do not invest in businesses that are deemed unlawful by Islam; and they typically appoint a second board specifically to oversee their compliance with these rules.
