BRITAIN'S first Islamic law compliant stand-alone High Street bank has opened for the first time in Scotland.
Al Rayan Bank, formerly the Islamic Bank of Britain (IBB), which has just over 2000 customers north of the border, has opened an office in Glasgow.
The West Midlands-based bank will not pay or charge interest and is founded on an Islamic financial model in which the customer and the bank share the risk of any investment on agreed terms, and divide any profits between them.
Nevertheless 2015 marked the most profitable year in the bank's history as post-tax profits increased from £1.2 million in 2014 to £10.3 million.
The move north comes some 12 years after IBB opened its first branch on Edgware Road in London.
A bank spokeswoman said that a key reason for the move was that it was able to form a partnership in Glasgow with the Islamic Finance Council, the advisory and developmental body, with which it shares its office location in Fitzroy Place, Glasgow.
She said: "It can take a long time to set up a location as we are reliant on a suitable third party being present in a location which suits us."
Cabinet secretary for economy, jobs and fair work, Keith Brown said: “Al Rayan Bank’s welcome decision to expand its operations into Scotland for the first time highlights the real opportunity offered by ethical finance.
"This announcement reflects Scotland’s growing profile in ethical finance."
The bank says it means Scottish customers will now have branch access to the UK’s largest range of Islamic retail banking products.
This includes Sharia compliant home and property finance products that are tailored to the Scottish market, savings accounts, current accounts and business banking.
ARB chief executive Sultan Choudhury said: "We have many Scottish customers, who in the past have managed their accounts through our online and telephone banking channels, so it’s with a real sense of pride that we can now welcome existing and new customers to our first permanent office in Scotland."
Omar Shaikh, UKIFC board member said ARB's move to Scotland was "great news for Scotland, as the bank provides consumers with a competitive, ethical alternative to traditional banking.”
The firm's expanison comes as demand for it's services has rocketed.
In 2015 the bank saw a 61 percent increase in customer financing, including a 46 percent increase in Home Purchase Plans to £455 million.
Three years ago the banks completed its first finance deal in Scotland for Al-Meezan, a non-profit, Islamic education organisation based in Glasgow.
The deal for commercial property finance, valued at £400,000, enabled Al-Meezan to complete renovation and extension work at its premises. It allowed Al-Meezan to have ten purpose built classrooms, a refurbished lecture theatre, a large foyer area, a multi-purpose room, a prayer hall, toilet facilities on both the ground and first floor, a lift and new kitchen facilities.
The bank was established to attract business from Britain's two million Muslims, many of whom do not use established banking services because they are in conflict with Sharia.
But it says it welcomes customers of all faiths and estimates that 94 percent of all fixed term deposit savings customers who have joined the bank in 2016 were non-Muslim.
ARM's deposit accounts operate rather like unit trusts, with funds invested on the depositor's behalf and a share of the profits replacing interest payments.
All banking services are overseen by a Sharia Supervisory Committee - experts in the interpretation of Islamic law and how it can be applied to personal finance products. The committee meets on a regular basis to review all contracts and agreements relating to transactions, and ensures no money goes to questionable outfits involved in, for example, pornography or alcohol.
Mortgages and loans use a “hire-purchase” scheme whereby the bank buys goods on the customer's behalf. The consumer then pays the bank a series of instalments until the cost, plus a profit for the bank, has been met.