LloydsTSB has expanded its Shariah compliant services by launching an account that allows banks to move money around the world on behalf of their individual and business clients, in keeping with Islamic Shariah law.
The Islamic Nostro Account is the first of its kind, claims LloydsTSB, to be offered by a mainstream Western bank and is a Shariah compliant version of the account used by all banks to distribute payments to customers across the world. Whenever individuals or businesses send money to other countries, the payments are made from one bank to another and are passed through a Nostro account in the process.
The new Lloyds TSB account is designed to ensure that the UK’s two million Muslims and 100,000 Muslim firms can make and receive international payments without compromising their faith. Many of these customers regularly make, or receive, international payments through the estimated 250 Islamic banks worldwide. However, until now, the process of transferring this money between banks has not been in line with Islamic principles.
The Nostro account adheres to the principles of Islamic law, because it does not pay interest on money banks hold in the account; does not provide an overdraft facility; and does not allow any of the funds held to be invested in industries – such as alcohol and gambling – which are prohibited under the rules of the faith.
The global Islamic financial services market is now worth an estimated $480 billion and is growing at almost 15% a year. As the range of Shariah compliant products and services widens, with developments such as the Nostro account, the market is expected to grow even further.