Lenders that avoid charging interest, in line with Koranic rules, are spreading -- even among Western institutions
When British banking giant HSBC Group (HBC ) began offering mortgages carefully formulated to meet Islamic banking practices last year in Malaysia, it was surprised that more than half of its customers were non-Muslim. What drew these customers to alternative financing that conforms to the strict dictates of Islam? Bank officials say that competitive pricing makes their Muslim-friendly mortgages -- which operate more like leases than loans -- competitive with traditional interest-based financing.
It's all part of a trend in which financial products that comply with the set of Koranic laws that govern a Muslim's daily life, or shariah, are evolving from a novelty into a normal part of doing business in much of the developing world. "Islamic banking isn't just for conservative or radical Muslims. It's mainstream business now," says Ross Mohamad Din, director of HSBC Amanah Malaysia, the bank's Islamic division. "That's why every bank wants a bigger piece of it."
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