A Norwegian bank has proposed a “halal” loan scheme based on Islamic principles which forbid charging interest.
Charging fees or interests on loans are forbidden under most interpretations of Islam. Storebrand, one of Norway’s largest banks, is trying to appeal to Muslims by getting around the principle.
The idea is to jointly own houses with customers and let the loan taker pay rent until they become the sole owner. Storebrand recently launched a website to get feedback from Muslims on the proposal.
“We wanted to find out if this can be another way for people to get into the housing market with ever higher prices,” the bank said on the website. “The product may be appropriate for young people, for graduates and people who cannot take up ordinary mortgage due to religious considerations.”
More than 300 people expressed interest during the first week, and the bank is now moving forward with the product.
“Storebrand is now currently evaluating the market potential for such a loan and considering what the product might look like,” Bjorn Erik Saettem, the bank’s communication manager, told Vart Land. “We have also been approached by financial advisers in the UK and Malaysia who want to help us to put together this type of loan.”
Saettem said the bank has received some negative reactions for the “halal loans” and that some customers even left the bank in protest.