Germany’s first Islamic bank opens in Frankfurt

A follow-up story from a previous post discussing the license being granted:

 

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Germany, home to 4 million Muslims, just got its first lender that adheres to Sharia law. Charging interest is prohibited, but some analysts see little difference to the way normal banks operate.

If, according to the Koran, trade is permitted but charging interest is the work of Satan, that would make most Western bankers more than a little devilish.

But tacking a fee onto the funds it lends out is not how Germany’s first Islamic bank, the Kuveyt Turk (KT) Bank, which opened in Frankfurt on Monday, will be making its money.

Instead, it will purchase a piece of property, for example, and sell it to a prospective homeowner at a higher price – which would technically not be interest. The sum can also be paid off in installments.

Lending is conducted, like at traditional banks, by tapping savers’ deposits. Individual customers are then given a share of the average yields from the bank’s credit operations.

That “interest,” however, is not allocated according to how much money a customer has parked at the bank.

Full article: Germany’s first Islamic bank opens in Frankfurt (Deutsche Welle)

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