Sydney, 15 July 2022 (TDI): The Australian Prudential Regulation Authority (APRA) has granted Islamic Bank Australia (IBA), the country’s first Islamic bank, a restricted authorized deposit-taking institution (ADI) license.
It is the first bank in Australia to provide Sharia-compliant banking services. In addition, it will provide services to 800,000 Muslim Australian.
The bank represents Australia’s rich multicultural makeup, including an 800,000-strong Muslim minority that makes for 3.2 percent of the population.
IBA, founded in 2020 and headquartered in Sydney, serves as a brand within the IBA Group.
Australia’s first Islamic bank is here! We are excited to announce we have now received our initial restricted banking licence. Whilst we are not yet open for business, we are building our system and processes and will test these with a small number of customers. pic.twitter.com/OEKD0nLwqF
— Islamic Bank Australia (@ibagroup_aust) July 6, 2022
According to the bank, the restricted ADI phase will last two years, during which time it expects to build out its systems and test and trial its products with a chosen number of consumers in 2023.
IBA Group was created by 13 Muslims, all of whom are shareholders, as is the UAE-based corporation Abreco Group
What is Islamic banking?
Islamic banking, also known as Islamic finance or Shariah-compliant finance, refers to financial operations that follow Shariah principles (Islamic law). The sharing of profit and loss, as well as the restriction on the collecting and paying interest by lenders and investors, are two key concepts of Islamic banking.
Moreover, the Islamic banking theory is based on Islamic Shariah. Islamic banking cannot engage in transactions containing interest/riba, according to Islamic Shariah. Furthermore, they cannot trade in transactions, including the elements Gharar or Maiser. The term Gharar refers to the ambiguity and deceit that result from the selling of objects before their existence.
Furthermore, they cannot engage in any transaction when the subject matter is illegitimate in the eyes of Islam. Also, Islamic banks focus on earning profits using Shariah-compliant investing strategies. Shariah equates capital gain with performance.
Islamic banking operations, which operate within the framework of Shariah, are based on sharing the risk that may occur from trading and investing activities through contracts of various Islamic forms of financing.
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