For Muslims in European countries and all around the world, it is very important to be able to bank according to principles in accordance with Islam. Islamic banking is a good solution in this case. But what exactly is Islamic banking and what are the options for it in non-English speaking countries. Does your country actually have Islamic banks or financial products that are in line with the principles of Islam? And what are any other options that might be of interest? You can read all about it in this article.
Unfortunately, as a Muslim, you have few (or actually no) options when it comes to Islamic banking. This forces you to choose options that may not be ideal.
Would you like to open a bank account without interest and do you want to be able to arrange this easily online? Then the Knab online bank offers you that option. This bank is not only available for private individuals, but also for business customers. In addition, you can also opt for the N26 German online bank, where you can even open a free bank account.
Those who would like to open an account with an Arab bank can choose Chaabi Bank. If you want to do Islamic banking there, you can contact the branch in Morocco.
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What is Islamic banking
When we talk about Islamic banking, we are talking about a way of banking that conforms to the principles of Islam. For example, in Islam it is not allowed to make money with money. This means, for example, that the receipt and payment of interest is not permitted. Many Western banks also invest in things like alcohol and weapons, which are prohibited according to the principles of Islam.
Islamic banking is not only interesting for Muslims. The principles of Islamic banking could be interesting for the entire financial system in the European (and other Western countries). The principles of Islamic banking could provide a more stable system. This is partly because in that case banks would not be allowed to speculate and for example not be allowed to trade in loans.
List of the best online bank account for Muslims
Are you looking for a bank account where you can put your money in without receiving interest on it? Fortunately, there are a number of options. The great thing is that these banks also offer you the options to request a bank account online, making it easy and quick to open a bank account.
1. N26 (Free bank account for Muslims)
It is also possible to open a bank account without interest at the N26 Online bank. You can arrange this online within a few minutes. The biggest advantage of N26 is that they offer you the option to opt for a free bank account.
2. Knab (Muslim-friendly bank)
Would you like to open a bank account without receiving interest on it? The Knab online bank offers you the option to opt out of receiving interest. You can arrange this quickly and easily by contacting the bank’s customer service via the chat in the Knab App or via your online banking platform.
Other online bank accounts without interest
At many banks nowadays you no longer receive interest on your checking account. This could possibly change in the future, but at the moment you will not receive interest on your payment account at ING and ABN AMRO, among others. These banks also offer you the opportunity to open a bank account online quickly and easily.
The Best Islamic Bank Account Branch in Europe
Europe does actually offer options for people looking for a good Islamic bank. This means that people could opt for a bank account without interest in their country. This way they can comply with the prohibition on Riba (which includes interest). Other people choose to give away the interest they receive in their bank account to charity and resolve it that way.
Several Western countries (including the United Kingdom) do have one or more Islamic banks. If not, there are often regular banks that offer Islamic banking.
A halal bank is a bank where, among other things, you can save and borrow money without paying interest on it. In addition, these types of banks do not invest in things such as alcohol, weapons and tobacco.
In 2015, Het Parool announced that Turkish bank Kuveyt Türk was looking at its options to open a halal bank in the Netherlands. The bank opened a branch in Germany that same year. Although that news report was encouraging, no branch has been opened in the Netherlands so far and people will therefore still have to move abroad to open a bank account with a halal bank.
Halal bank mortgage for Muslims
Because Western banks work with things like mortgage interest, (many) Muslims are actually trapped. People may want to buy a home, but have conscientious objection to buying a home with a current mortgage, which often leads them to stay in rented homes.
A good solution for this would be the halal mortgage. In that case, the bank can buy the house that you have in mind and then sell it on to you. That way you actually buy the house (sort of) on an installment plan. Another option is, for example, that the bank is co-owner of your house and that you monthly buy off part and pay rent on the part that is not yet yours.
Unfortunately, the halal mortgage does not yet exist in many European countries. This is partly due to the current regulations regarding mortgage interest relief. A similar scheme should be set up for halal mortgages to enable this type of mortgage to be introduced. Until now, no suitable solution has been devised for this, so that the possibility of taking out a halal mortgage has not been available until now for many residents.
Chaabi Bank (Arabian bank)
Chaabi Bank is part of the largest banking group in Morocco and has opened branches in several European cities. If you would like to bank specifically Islamic, you can contact the branch of this bank in Morocco. An application for Islamic banking is not yet possible from the Netherlands and many other European countries.
Saving according to Sharia: interest is prohibited
Sharia means something like ‘Islamic law’. Saving with interest (Riba) is prohibited according to Sharia principles. This makes it difficult to open a regular savings account with a Dutch or regular bank, on which interest is often paid, because it goes against the principles. This makes many people opt for a bank account without interest or for giving away that interest to the poor and needy.
Alternatives can also be considered. For example, there are people who keep their money in a safe place and do not put it in a bank account. The money can also be invested in goods, such as gold or silver. In addition, the money can be invested. A choice can be made for shares that comply with the rules, so that no money is invested in matters that are not in accordance with Islamic principles.
Differences between Western Banks and Islamic Banks
There are a number of major differences between Western and Islamic banks. In Islamic banking, banking complies with the rules of Islam. This applies, among other things:
a prohibition on (usury) interest
a ban on investments in such things as alcohol, pork production, the arms trade or the gambling industry
a ban on speculation and gambling
a ban on taking unnecessary risks.
Islamic banks should contribute something to the economy and should not make money with money. Partly because of this, there will, for example, be no question of receiving or paying interest.
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