LLOYDS TSB MOVES INTO ISLAMIC HOME FINANCE
(22 March 2005)

Lloyds TSB has launched an Islamic home finance offer to help Britain's Muslims purchase their own homes. It is one of a range of financial services which Lloyds TSB plans to launch for the Muslim community in the UK - many of whom have taken a traditional, interest based mortgage or choose not to buy their own homes, for religious reasons. The home finance offer follows Lloyds TSB's launch last month of an Islamic current account and complies fully with Islamic law (Shariah) which forbids both the payment and receipt of interest, known as Riba.

Instead of lending money for a property, the bank will buy the home, contributing up to 90 per cent of the purchase price. The customer will pay the remaining percentage upfront and would repay the outstanding sum over an agreed term, together with a rental payment.

Lloyds TSB Islamic Home Finance is being piloted, alongside the Islamic current account, in selected branches across the UK including London's Edgware Road, as well as branches in Birmingham and Luton.

Mark Austin, Lloyds TSB Islamic Financial Services, said: "Finding the money for a new home can be tough at the best of times, but Britain's Muslims face an even more difficult dilemma. With traditional interest based mortgages out of the question for many, the choice has tended to be between going against the faith, or avoiding a mortgage altogether."

"Our research tells us that three quarters of the country's Muslims want banking services that meet the needs of their religion and this new home finance product should help bring a new generation of homeowners onto the property ladder."

ALBURAQ HOME FINANCE

The Islamic home finance available through Lloyds TSB is alburaq Home Finance. alburaq is a registered trade mark of ABC International Bank plc and is the brand name under which Islamic products are provided. alburaq Home Finance is based on the principles of Ijara and diminishing partnership (Diminishing Musharakah).

In this form of Islamic home finance, the bank and customer jointly buy and own the property. The bank purchases up to 90 per cent of the property, with the customer purchasing the remaining percentage with an initial payment. As the main buyer of the property, the bank is the legal owner of it, but through monthly payments, the customer buys the bank's share of the property over an agreed period. The customer also pays rent as part of the monthly payment to the bank, because the bank is the legal owner of the property. However, as the customer buys the bank's share of the property, rent as proportion of the monthly payment decreases.

During the pilot anyone who wants to apply for home finance or a current account will need to visit one of the five pilot branches. These are, Edgware Road, London; Temple Row, Birmingham; Saltley, Birmingham; George St, Luton; and Leagrave, Luton.

SHARIAH SCHOLARS

In order to ensure that the home finance is fully compliant with Islamic law (Shariah), Lloyds TSB has consulted with a board of renowned Islamic scholars, who have advised on all aspects of Islamic finance law. The Shariah Scholars involved in developing the Lloyds TSB Islamic current account and home finance are:

Sheikh Nizam Yaquby

Sheikh Nizam Yaquby is a member of the Shariah Committee for several Islamic financial institutions. He has received an MSc in Finance (Canada) and is based in Bahrain. He has been a Professor of Tafsir, Hadith and Fiqh in Bahrain since 1976 and the author of several articles and publications on Islamic finance in English and Arabic.

Dr Muhammed Imran Ashraf Usmani

Dr. Muhammed Imran Ashraf Usmani holds a PhD in Islamic Finance. He has also obtained degrees in Islamic Jurisprudence from Karachi. Dr. Usmani is a faculty member of the Jamia Darul Uloom, Karachi and Institute of Business Administration (IBA), Karachi as well as the author of various books on Shariah.

Mufti Abdul Kadir Barkatullah

Mufti Abdul Kadir Barkatullah is the Imam at the North London Finchley Mosque. He acquired a Mufti (diploma) in Islamic law and Fazil (Bachelor of Islamic studies) from the Islamic University, India. He also works as a supervisor at the Islamic helpline for Fatwa and as a presenter at Vectone Urdu.

Muhammad Nurullah Shikder

Muhammed Nurullah Shikder is a Barrister-at-Law and Imam at the Tunbridge Wells Mosque. He received a LLB degree from London Guildhall University. He advises individuals and businesses on Islamic finance.

For information on the Islamic Account or Home Finance product customers can call the Islamic Financial Services line on 08456 007 786.