Lloyds TSB has launched an account that allows banks to move money around the world in a way that complies with sharia'h law.
The new Islamic Nostro account is thought to be the first time a Western bank has created such a product. The account adheres to Islamic law, as it does not pay interest on money the banks hold in the account, it does not provide any overdraft facility and does not allow the funds held to be invested in industries prohibited under Islam such as alcohol and gambling.
Banks such as the newly established Bank of London and The Middle East are the target customers for this new product.
"This account is a real milestone for banks like ours and means we can give our customers reassurance that their money is being dealt with according to Islamic law, from the moment it leaves their account to the moment it reaches its destination,” comments Simon Ratcliff, head of operations at the Bank of London and The Middle East.
The launch of this product further consolidates London as one of the key centres of Islamic financing. Lloyds TSB has previously launched sharia'h-compliant mortgages, current accounts and investment fund over the last year.
Globally, Islamic financial services market is worth an estimated US$480mn, and is growing at almost 15% every year.
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