NAB broadens Islamic finance focus into business loans
NAB has launched a specialised business financing product for their Muslim customers, the latest result of a program that began five years ago.
This specialised product follows Islamic Law requirements where it is prohibited to charge customers interest. This practice is considered dishonest because the lender does not assume part of the risk.
Now NAB offers Sharia-compliant loans for construction and commercial property development for over $5 million. These loans are structured to work as a lease, “where ‘rent’ and ‘service fee’ are paid instead of ‘interest’,” according to the bank.
“There are some really interesting structural elements that we negotiated to finalise this latest offering in order to ensure that we comply with Australian federal and state tax laws and at the same time remain true to Islamic principles,” says Dr Imran Lum, director Islamic finance in NAB’s deal structuring and execution team.
Muslims make up 2.6% of Australia's population which is roughly 600,000 people, according to the 2016 census data. And industry reports claim that there is a $250 billion market for Sharia-compliant finance and investment in Australia.
NAB is the first major Australian bank to create financial services to cater to Aussies who practice Islamic faith. It also offers Sharia-compliant home loans.
If you are thinking about taking out a business loan, check out our business loan comparison page.