Islamic finance is an ethical, indigenous, and equitable mode of finance which derives its principles from the tradition of the Prophet Muhammad (pbuh). Sharia law (Islamic law), which is based on the Quran and Sunnah, governs Islamic finance.
Islamic Finance as a concept is based on themes of Community Banking, Ethical and Socially Responsible Investments and Affinity Marketing. These themes themselves are based on core ideas, which include individual responsibility, reliance on market mechanism, commitment to economic and social justice and mandatory care for the environment. In Islamic Finance, scholars say that everything is allowed except that which has been specifically forbidden. In essence the believing Muslims view of economics is based on Man’s obligation to organise his affairs in accordance to the will of God as his representative and vice regent on Earth. The goal is not equality but an avoidance of gross inequality along with an injunction that wealth should not become “a commodity between the rich among you”. Islamic Finance is firmly embedded in the commercial, real, value-producing economy.
The Credit Union is currently investigating the prospect of offering an Islamic type loan based on Shariah law. This has been successfully done by a few Credit Unions overseas and the option is to link this to the Islamic Saver account. At present, the payment of a dividend on the Saver Plus account conforms to Islamic ideals since it is not an interest payment however, although Credit Unions loans are not granted to make a profit but to service the operating cost and pay a return to members most Muslims are able to participate in the product. Notwithstanding a loan which incorporates the teachings and conform to traditions and law will be a valuable extension of our work and this is being aggressively considered.