Good banks that operate in markets/currencies with decent liquidity tend to do a pretty good job matching the maturities of their assets and liabilities.not if the overnight cash rate increase several percent over the life of a 30 year loan... you have to take that into account. Say its calculated at 8% over the mortgage... if RBA rates go to 10%, the bank would be borrowing their money at 10% and only getting 8% back (so to speak) - i know thats now exactly how it works but the bank would be loosing out if that was to happen
Macca is old news redone by the journalists just to get you biting... its worked
They just added Muslim on it for abit more effect..
I'll try again.Yes Roe is right -- its been in for decades...
So why add Muslim?
I doubt they have even said a word...
Journalists are good at stirring the pot - stir up the masses
ONE of Australia's major banks is planning to introduce "Muslim-friendly" loans that do not charge interest to comply with sharia law.
Instead, the National Australia Bank will structure an Islam-approved line of finance to make money from alternative methods.
These include profit-sharing on the transaction, joint-ventures or leasing-type arrangements.
For example, to get round the Islamic ban on usury - or unfair lending - a Muslim mortgage often works by the bank buying the property, then selling it to the customer at a profit. The customer then repays the sum in instalments.
In this way the profit margin is built in from the start. It also makes the loan immune from future interest rate rises.
NAB said the loans would have to be cleared by a Sharia Advisory Board to ensure they met strict criteria.
"We are dipping our toe in the water and thought we may be able to offer this product in high-density Muslim areas," said Richard Peters, head of community finance & development at NAB.
I'll try again.
Don't blame the journalists.
It was the NAB who described the loans as "muslim friendly".
I know it's fashionable to blame the media for everything but at least in this instance they are simply accurately reporting the NAB's news release.
NAB said the loans, which will start out small, will have to be cleared by a Sharia Advisory Board to ensure they meet strict criteria before they can be made available to the public.
"We are dipping our toe in the water with this scheme and thought we may be able to offer this product in high-density Muslim areas," said Richard Peters, head of community finance and development at NAB.
Plenty of opportunities for your media bashing when it's justified. No need to stick it to them when they're reporting facts.
just because the words 'muslim friendly' are in quotation marks, doesnt mean that the NAB were the ones say that... it could have come from anywhere
Christian used to have the same law, basically it's a sin and you rott in hell if you charge people interest.
It took a clever Jew to get around itagain he called it transaction cost and fees
I remember reading about the Knights Templar who were the biggest money lenders before banks, they were forbidden by this church law of charging interest - so they "rented" the money to borrowers.
I wonder if the Vatican Bank charges or pays interest...........
How about we start a religion that ban's anyone making a profit from us
Can someone explain the reason behind why Sharia law prohibits interest being paid or charged?
cheers
Muslims get interest-free loans
By Nick Gardner and Warner Russell - June 14, 2009 12:00am
ONE of Australia's major banks is planning to introduce "Muslim-friendly" loans that do not charge interest, to comply with Sharia law. Instead, the National Australia Bank will structure an Islam-approved line of finance to make money from alternative methods. These include profit-sharing on the transaction, joint-ventures or leasing-type arrangements. For example, to get round the Islamic ban on usury - or unfair lending - a Muslim mortgage often works by the bank buying the property, then selling it to the customer at a profit, with the customer then repaying the entire sum in instalments. In this way the profit margin is built in from the start. It also has the advantage of making the loan immune from future interest rate rises.
NAB said the loans, which will start out small, will have to be cleared by a Sharia Advisory Board to ensure they meet strict criteria before they can be made available to the public. "We are dipping our toe in the water with this scheme and thought we may be able to offer this product in high-density Muslim areas," said Richard Peters, head of community finance and development at NAB. "We suspect there is demand out there, but we don't know how big it is, so we will trial a few products first."
For the trial's purposes NAB will pump $15 million from its not-for-profit finance division into the program, which will distribute the funds through various community finance schemes around the country. The bank will monitor the take-up and assess potential demand.
Interest-free loans of up to $1000 will be available to help finance household items, such as washing machines and fridges. The loans would also be available to non-Muslims.
The news comes just days after federal Assistant Treasurer Chris Bowen said that Australia could exploit international demand for Islamic finance to create more jobs.
Ah, if that was the headline, then you do have something to complain about.I think their choice of words, especially in the title leaves much to be desired though. The article is number 1 in both news.com.au and the Daily Telegraph.
I suspect they wanted to lure people into outrage to make them think Muslims were getting something for nothing, before sneakily mentioning "they just added some profit" to the total loan balance. Would it have such an impact if they changed the title from:
"Muslims get interest-free loans" to
"NAB capitalises all interest into loans for Muslims"?
I'm not sure what product development has to do with waiting times experienced by customers. Like it or not, the world's most populus Muslim country is right on our door step, making it a large (and growing market segment). Rather than look at it as a them vs us proposition, why not see it as an opportunity for an Australian bank to develop expertise in a product that is poorly understood and generally ignored by western banks.You'd think they'd look after existing customers/applicants before they tout for other business like this.
nothing news this stuff been around for decades.
don't think you getting a better deal, they structure it so you effectively pay the same amount of interest.
Interest in another term like fees, transaction cost for them
Like it or not, the world's most populus Muslim country is right on our door step, making it a large (and growing market segment).
1. Islamic Banking
Except for Saudi Arabia, the banking laws and practices of countries of the Area are generally based on western banking systems. A notable trend for the application of banking based on Shariah (called Islamic Banking) started in the Area in recent years. Islamic Banking could, in theory, be fairly straight forward. In accordance with Shariah Muslims can trade and invest in anything that is accepted (called halal) and not prohibited (haram). Prohibited matters broadly include things that are illegal or immoral such as gambling, prostitution, pornography, alcohol, drugs and similar other matters. The main difficulty arises in the classification of interest charged on funds in Shariah. While some Islamic jurists and scholars consider all types of interest as usury which is prohibited in Shariah, others consider simple interest acceptable and only compounded interest to be prohibited. Although the argument on interest continues, Islamic banking is expanding in the Area where banks and investment funds based on Shariah banking are being established.
For more information see Extracts from the book "UAE Company Law"
What is Shariah Law?
Under Shariah Islamic law, making money from money, such as charging interest, is usury and therefore not permitted. Wealth should be generated only through legitimate trade and investment in assets. But investment in companies involved with alcohol, gambling, tobacco and pornography is strictly off limits.
It's not about supporting the entrenchment of islam, but a profit opportunity...
The Sharia boards supervising the Islamic banks and Sharia-compliant financial services offered by regular European banks are composed of members of the European Council for Fatwa and Research. This Council is headed by Sheik Yousef Al-Qaradawi, a leader of the Muslim Brotherhood and instigator and financier of terrorism in Europe and the Middle East. Both Al-Qaradawi and the Council have expressed their hope that “Islam will return to Europe as a conqueror.”
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