Posted on August 31, 2005

Bank Considers Sharia Loans

Copenhagen Post, Aug. 31

Jyske Bank is considering offering the country’s 200,000 Muslims special interest-free ‘sharia’ loans.

Orthodox Muslims believe that the Koran forbids them to pay rents, imam Abdul Wahid Pedersen told daily newspaper Politiken.

‘That means we can’t go into a Danish bank and take a loan to buy a house or a car,’ he said.

In fact, a ‘sharia’ loan costs customers the same as a regular loan, but instead of interests, clients pay additional fees to cover the costs.

Jyske Bank district director Hans Barth said the bank was considering the option.

‘I would like to consider offering interest-free loans,’ he said. ‘One year ago we discussed it openly, and we found it just fine to recalculate our interest rate income as a fee.’

The country’s biggest banks, however, Danske Bank and Nordea, rejected the idea.

‘We don’t like to discriminate between our customers,’ said Christian Bagger, Danske Bank spokesman. ‘Our products should appeal to the broad population. Otherwise, we would be forced to offer special products to scores of groups.’

In Britain, sharia loans have become common after the country’s first Muslim bank opened in 2004, prompting more traditional banks to offer loans without interest rates.

Bank expert Bjarne Jensen said he found it likely that the development would spread to Denmark, too.

‘If the demand is there, somebody will be there to supply it,’ he said. ‘It could be something to do good business on.’

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