Netherlands: Interest in Muslim loans unclear

The number of Muslims who would opt for an Islamic mortgage if it existed on the Dutch market is unclear, Rabobank spokesman Rene Loman told Deutsche-Presse Agentur dpa on Monday.

Loman was responding to news Monday by the Amsterdam city board that it will ask the Dutch Finance Ministry to enable banks to offer its clients Islamic mortgages.

Replying to questions by the city council's Labour faction, the board said it is "unacceptable that a group of Dutch nationals would not be able to purchase a home."

Muslim inhabitants should be able to enjoy the advantages of home ownership, including tax relief on mortgages, the city board added.

Officially, a prohibition on charging interest in Islam prohibits Muslims from taking a regular mortgage.

But spokesman Loman of Rabobank, which has a 29 percent market share of the Dutch mortgage market, says Dutch Muslims purchase homes also without Islamic mortgages available on the market.

"We have many Muslim clients who have regular mortgages," Loman said.

Almost two years ago, Rabobank produced what is so far the only Dutch study investigating possible interest in Islamic banking among Dutch Muslims.

According to the findings, some 200,000 of the Netherlands' 1.2 million Muslims expressed an interest in Islamic mortgages.

"These 200,000 do not represent the potential market," Loman stressed on Monday, "the actual number of people willing and capable to take a mortgage might be different."

Loman says Rabobank will not develop a financial product for the Orthodox Muslim community until after the Dutch government has adjusted the law so that Islamic mortgages will become tax deductible similar to interest-based mortgages.

The second obstacle - how to fund interest-free mortgages from financial resources that are also interest-free - remains to be tackled, Loman said.

"Islamic banking requires product development with all parties involved," Loman explained. "Apart from the finance ministry, we would also involve the Muslim community to ensure our product meets the Islamic standards."

On 16 July Finance Minister Bos told parliament he was investigating options of developing Islamic banking in the Netherlands. He indicated Islamic banking provides interesting business opportunities for the Dutch financial industry.

Islamic law prohibits the collection and payment of interest, as well as investment in businesses that are considered illegal or that engage in activities inconsistent with Islam. Instead of charging interest, Islamic banks share profits and losses to finance their activities.

At present, London and Dubai are the main centres involved in Islamic banking. Prestigious international banks, like Citibank, Standard Chartered Bank and HBSC have been operating interest-free windows in a number of West Asian countries, Europe and the USA for several years.

Source: Expatica (English)

See also: Netherlands: No tax deduction for halal mortgage, Hague: Halal mortgages