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Muslims keen to comply with the financial strictures of religious Islamic law may be able to buy Premium Bonds for the first time after a government review announced yesterday.
Ed Balls, the Treasury Minister in charge of City affairs, wants all types of government-sponsored savings products to be accessible to those who adhere to Sharia.
Premium Bonds, a favourite among small savers for 50 years — with the numbers that decide the winning bonds generated by a machine called “Ernie” — will be among the National Savings products to be tested for suitability. All other National Savings accounts will also be examined.
Government bonds — so-called gilts — sold to individuals and big institutional investors will also come under the feasibility study. They may be where the biggest impact of any review is felt.
The Government will issue about £60 billion of gilts this year. The Treasury estimates that Islamic assets top £125 billion worldwide.
Financial products offered by the Government to ordinary Muslim investors present a challenge for National Savings, which provides safe and simple products ranging from Premium Bonds to savings accounts. Premium Bonds will have to overcome two difficulties: Sharia outlaws the payment of interest; and gambling runs contrary to strict Islamic tradition.
Nation states most commonly borrow through the issue of bonds. Several Muslim countries, such as Malaysia, Singapore, Qatar and Dubai, issue a proportion of their national debt in Islamic bonds.
Most Islamic financial products work on the principle of investing in a fixed asset able to generate a rate of return, such as property that yields rent or an asset that can repay a larger capital sum on redemption. These avoid paying interest.
Pakistan has issued an Islamic bond linked to its motorway network, which generates income through road tolls.
The Treasury was unable to say how British bonds might be structured but, if it does find a way, Britain would be the first European state to issue financial products that are compliant with Islamic law.
If National Savings can devise a product that is able to produce a competitive rate of return it would spark interest from non-Muslim investors, who would be attracted by its performance alone.
The commercial sector is already moving into the Islamic market. Lloyds TSB, one of the biggest banks, announced this month that it would provide Islamic accounts for businesses. It also offers Islamic current accounts and mortgages.
The National Savings’ review will report next spring, in time for the Budget, as part of an on-going look at the products offered to retail investors.
Sharia-compliant government bonds, including Premium Bonds, would be aimed at Muslim investment funds or wealthy individuals in Britain or the Middle East.
The Treasury would hope that greater access would reduce central government costs associated with bond issuance as well as making its financial system more inclusive.
Mr Balls is expected to announce the moves today at a conference hosted by the Financial Services Authority. He will say: “Domestically, we will do everything we can to promote new ways for British Muslims to bank, save and borrow using Islamic finance products.”
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Unbelievable. The stench of hypocricy and little england permeates the air. Just for a moment, take the word 'islamic' or 'muslim' out of the article and look at it from the perspective of another form of ethical investment. Would you make the same comments then? I don't think so.
The downright racism and islamophobia being presented by some of the respondents quite frankly is vomit inducing.
So what if banking systems in non-muslim countries are expanding so that they can address a wider market? think of it as the power of capitalism i.e. lets make a buck wherever we can make a buck. If this means responding to a different set of economic values based on alternate ethical and moral requirements- so what?
I am muslim. I dont practice islamic banking now and i probably wont in future. But i wouldn't criticse anybody who wants to, nor would i criticise anybody for wanting to make a buck out of it.
After all, we have been practicing 'christian' banking for centuries have we not?
Naeem Malik, Manchester,
In the middle ages, Christians objected to usury too. and it wasn't until 1571 that it was allowed to them by English law - by an "Act Against Usury", naturally!
We should not be encouraging the primitive attitudes we grew out of centuries ago amongst Islamists, but helping them to develop and modernize their ideas as Christians eventually did.
Equality is a two-way street, as eddie from Glasgow astutely pointed out.
Eric , London, England
The islamisation of the UK by a minority of the population is outrageous. The tail is wagging the dog and the government encourages it.
howie, london,
Seaweasel, how can a financial product be more competetive if no interest accrues on the investment? Money has to be made somehow for the investment to work, replacing the word 'interest' with some other word makes no difference to the product.
David Leslie, Perth, Scotland
I wondered why one of Blairs first ever acts was to get the death sentence removed for the crime of treason. Now I know why - the <censored> has betrayed us all and sold the country out to Islam.
Whats next - allowing the beheading of non-Islamics for daring to criticise anything Islam does????
I really wish I could emigrate!!!!!!!!!!
Neil, Dagenham, England
The attitudes in these comments are embarrassing and saddening. Apart from the fact I see nothing wrong with the government providing a service for tax-payers, many non-Muslims are starting to use Islamic financial products because they're often more financially competitive and ethical than standard products.
The sooner the UK breaks up the better. As well as Scotland and Northern Ireland being rid of racist Little Englanders, hopefully the downward economic spiral that will be caused by this insular right-wing mindset will help an independent England come to it's senses and become a modern progressive democracy.
seaweasel, Glasgow, Scotland
Sorry, I must be missing something here, but I can't recall when Sharia law was made pre-emminent in the UK. Perhaps somebody could remind me, so that I can escort my wife and daughter about their daily lives.
David Leslie, Perth, Scotland
And I'm sure that it is only a matter of time before all Muslim countries offer non Sharia investment opportunities to Christians, encourage Christians to build churches in Muslim countries, and allow Christians to buy up all their local shops and peddle alcohol to their young people.
eddie , Glasgow, UK
I don't get it. All money is tainted by association with interest gained one way or another. Tthere is no money not at least tangentially related to interest one way or another. This is pure hypocrisy on the part of the government and the people who are demanding "pure" interest-free money. Calling it "rent" is a lie.
B. elson, Toronto,
Another nail in the coffin of the British way of life, seems very reasonable to announce this on St Georges Day.......
Will Moslems soon be able to hold back some of their income tax as a proportion of the defence budget is spent on defending against their Moslem "Brothers", not very Sharia friendly!!
Kevin Smith, Runcorn, Merseyside
Can anyone in government explain WHY national savings schemes need to be tailored to meet the requirements of a small minority of a small minority of potential individual investors? If the whole of the global Islamic bond market is only £125 billion, the investment excluded by not pandering to religious fanatics in the UK Government Bond market, which could only expect to attract a few percent at most of the global Islamic market, is a trivial sum. Besides which, Islamic banks already buy UK Gilts, so they have worked out a way around Sharia requirements anyway. This pandering to riligious extremism will further marginalise the Islamic community in the UK, and open the government up to further ridicule on multiculturalism and insane political correctness.
Peter, London, UK
Does any Muslim country do domestically, everything they can to promote new ways for non-Muslims to bank, save and borrow using Western finance products?
Stuart, Dublin, Ireland
Yep - another few hundred BNP votes in the bag. What else is soon going to be under Sharia law in this country? It won't be long before ALL women have to cover their heads so that we're not inciting male lust. Get a grip in the local elections people. Your country REALLY needs you NOW!!!
Alison, Paignton, UK
So Sharia starts here, and we're paying for it!
Great! Time to get to the boats before they all go.
Bry Barnes, Somerset, Sharia Britain
It's easy enough with Premium Bonds: you sell special Sharia bonds that never go into the draw so never win.
Bill Linton, London,
The acrid stench of spreading sharia. We are not a sharia state, there is no need for this service. If they want sharia bonds, then buy them from muslim countries, not Britain, or do I mean Britain-istan.
James, Reading,
So will you start going by "Britistan" or "Saudi Brittania"?
Farewell, England...
"Living on a Thin Line"
--The Kinks
B. W. , Mpls, US/MN
If islamic law did not permit the payment of taxes to the goverment, would Blair find ways to facilitate this as well ?
We've heard of 'cash for honours' this smacks of prizes for votes.
Rick, London, England
So Sharia starts here, and we're paying for it!
Great! Time to get to the boats before they all go.
Bry Barnes, Somerset, Sharia Britain
I am looking forward to the Sharia National Lottery:
"It could be you, inshallah !"
Rob, Reading, UK
Please God, remove this Government as quickly as you can.
Paul, Rochester, UK
My religious beliefs state that if I buy premium bonds, then I must win every week. Will the government change the rules to accomodate me?
Sanjay Mazumder, London, UK
It is a total waste of time complaining about the country going Muslim. Just give them the country, and stop years of stress trying to stop them. Unless we have a government who is prepared to stand up to this situation, England is doomed. the country that we older generation used to love and enjoy has gone I am glad that I have lived through the 50's 60;s & 70;s after that it started to go downhill Good bye England's most pleasant land.
victor, westclff on sea, uk
Singapore a muslim country?
What makes you think that?
Singapore is multicultural, and multi ethnic.
Official languages are English and Mandarin.
Malay.Indian,Chinese make up the main ethnicities,with the majority Chinese.
The four languages are used in public service announcements, in the railway system etc.
All the major religions are present.
Church and state are separated.
LIke Scotland, there is a one state,many ethnicities approach(on billboards all over both countries).
fraser kelly, singapore, singapore
It is all hyprocrisy, you can not borrow money in any Islamic country without additional payment in one form or another. Just too cater for so called sensativities, interest is called some thing else. However, bottom line is that you still have to pay for borrowing money.
chris, woodbridge, suffolk
Great. What next? Is the Government going to start creating financial products that are entirely handled by white-only staff, and which invest only in white-owned businesses, to be consistent with the beliefs of whites who left South Africa and who still hanker after apartheid? If not, why is pandering to islamic ideology something the government should be spending time on?
Nick, Roherham, UK
I have no problem with proper tolerance of religion.
I always thought we lived in Christian country and followed Christian principles. When I lived in an African country part of the deal was that I lived by their laws. I may not have agreed with all of the laws, but that was not up for discussion.
Presumably Islamic countries will reciprocate in granting recognition of Christian rights and beliefs?
Bernard Mahan, Edinburgh, Scotland