1491795599348 - Sharia finance a growing market but NZ banks not acting yet

Sharia finance a growing market but NZ banks not acting yet

Sonny Bill Williams could find his rugby career significantly curtailed if he refuses to support any sponsorship that runs contrary to his Islamic religion.

Williams taped over the BNZ logo on his collar in his first game for the Blues.

New Zealand Rugby revealed that Williams has lodged a conscientious objection in his contract to finance companies, banks, alcohol companies, tobacco companies and gambling companies.

Williams is Muslim and paying or receiving interest on loans is forbidden in Islam.

READ MORE: Prime Minister Bill English criticises Sonny Bill Williams’ decision to cover sponsor’s logo

Sharia Law governs all aspects of Muslim life, and imposes restrictions on finance and investments within the Islamic tradition.

The central tenet is the interest is usury and the use of money for the purpose of making money is forbidden.

Wealth must be generated from legitimate trade and asset-based investment. Investors are also required to invest in things with social and ethical benefit. They usually avoid weapons, pornography, alcohol and gambling.

Victoria University religious studies professor Paul Morris said insurance was also potentially a problem – which could mean Williams may object to playing at AMI Stadium. The Blues are also sponsored by insurer nib.

“There are Shariah-compliant insurance schemes based on the principle of Ta’awun (joint protection) where the losses of the few are covered by the contributions of the many. The basic advantages of Takaful insurance are fostering communal solidarity and being non-profit-making.”

He said there were more Islam-friendly finance options becoming available worldwide.

If they offer a mortgage, Islamic banks can profit by helping customers purchase a property by either charging rent or having the customer pay off a larger loan than the market value of the property.

For savings accounts, banks offer to invest money in compliant investments and return a target profit, rather than interest.

Some providers also charge “purification” fees.

Morris said New Zealand financial institutions were exploring Sharia-compliant products. The world’s Islamic population is predicted to grow by 35 per cent by 2030.

“Given the team’s sponsorship by the BNZ, if cleared with the bank and management it does seem to be OK, if unusual. But perhaps given the role of finance and the gambling associated with professional sport this is not an ideal site for religious expression.’

There are just over 900 members of New Zealand’s Amanah KiwiSaver scheme, which is Sharia-compliant.

But Claire Matthews, a banking expert at Massey University, did not expect the products to become mainstream.

“I think there is a growing market in New Zealand for these types of products, so that could encourage it.  However, they are different from ‘normal’, and therefore can create some challenges to operate within an existing banking organisation particularly because the funds could not be intermingled.”

New Zealand Bankers’ Association chief executive Karen Scott-Howman said banks were constantly responding to customer preferences. 

“That’s certainly the case with mobile and internet banking. We’re not seeing that kind of demand for Sharia-compliant banking here.”  

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