A piece in the AFR today (page 59 – no link if you are not a subscriber, if you are it is here) is, I think, a little premature. The NAB has for some time been supporting a charitable scheme run by a part of the Roman Catholic Church that is aimed at low income earners, helping them to borrow enough to get things like fridges and washing machines and then pay the money back over time without interest. The recent media release where they announced an expansion to the scheme seems to have been taken as an announcement that the NAB is serious about Islamic finance.
The thing to note about this scheme is that it is not an Islamic finance initiative – it is charitable giving. The NAB should be applauded for that charity (and I would like to see more of it from the other banks) but this cannot be taken, as the piece in the AFR seems to be saying, as a start in the Islamic finance area. It will not give them any experience in Islamic finance. Islamic Finance is a serious business, with profitability still expected from conducting it.
The way the scheme works is that the NAB hands money to the Good Shepherd Youth and Family Service who then lend it out. There is no return to the NAB so this is not a business.
That said, perhaps some good will be done as this gets through the NAB media reporting system. You can guarantee that a piece in the AFR reporting a possible new business initiative will have been seen by some very senior people in the NAB.
If it does get anywhere perhaps they will consider it. OTOH, one of the other banks may decide to take up the baton and give this a try. In the mean time, if you are looking to get this underway in Australia, there is already a mechanism in Australian law that would allow the Muslim community here to do it for themselves – the religious charitable fund, as I suggested nearly 3 years ago. If you (the Muslim community) want to do it I would be happy to be what help I can.
If NAB or one of the others want to do it, I would also be happy to help. Contact details are on the “Author