Al-hamdu lillaah Yaa Rabb! Allahu Akbar!! Allahu Akbar!!! This is the only expression that I could imagine, while deciphering the long awaited dream of twelve years; Islamic Bank Australia; here it is today!
To prudentially convince the top regulators in the land, within the stringent legal limitations of the Banking Act 1959, approving a truly Shari’ah compliant Islamic bank in Australia was indeed, difficult to the extreme. At the same time, achieving it was a very highly revealing and appreciated Islamic milestone for the Australian Muslims!
While walking or shopping in a banking square, in the mix of the big four or five, you will also see another bank; Islamic Bank Australia and that is your bank!
Insha Allah, it will go a very long way away, in building a strong and independent Islamic identity of the fast growing Muslim community in Australia. Practically speaking, one’s heart dwells only three centimetres above his/her stomach. If the source of feeding a believer’s stomach is contaminated by having to deal with ‘interest’ (riba), his heart is bound to exasperate from the tainted oxygen!
Here is the bottom line for a true believer: ‘Declaring an active war with Allah and His Prophet, by dealing with interest, (فان لم تفعلوا، فأذنوا بحرب من الله ورسوله),’ is never an option! (Qur’an: 02:279)
Any believer who declares many times a day that ‘God is the Greatest in my life’ (الله أكبر), will never choose to declare a war between him and God. Avoiding such a dichotomy in the life of a believer, was the main objective behind the prohibition of dealing with interest in the Qur’an.
Charging interest will make you ‘an aggressor’ (ظالم) and having to pay it, will make you ‘an aggressed upon’ (مظلوم). The Qur’an 02:279.
How to avoid dealing with interest, effectively in the banking and financial setting in Australia, was the real challenge! The first and the foremost of my identity is a dedicated worker al-Da’wah ila Allah!
In this space, by founding the Islamic Bank Australia, I was determined to establish peace between Allah and His Prophet on one side and a seriously dedicated believe on the other!
Under the Australia’s Banking Act 1959, one must declare ‘the type of interest and rate of interest’ in a home finance. As such, obtaining a home finance legally, by avoiding interest, was a knife-edge option! The most daunting aspect of this challenge was, to provide an effective and truly Shari’ah compliant alternative in the modern-day banking and financing environment.
This alternative must also meet the dynamic regulatory requirement in Australia as above. While doing so, no compromise could have been made with the mandate of true and dynamic Shari’ah compliance. Alhamdu lillah, no compromise has been made either!
At the end, a Shari’ah definition of riba, interest had to be devised and which was functionally avoided in all products of Islamic Bank Australia.
So the prohibited interest in Islam is defined as: ‘A predetermined sums or percentage of money to be paid on top of the principal amount lent, in lieu of time elapsing’. So any amount paid on and above the original sums borrowed, is interest and prohibited in Islam.
Avoiding it altogether is what one’s commitment to Islam wants and this is exactly what the community demands.
Since 2010, after 12 years of regulatory jostling and adjusting the proposed IBA products with the Australian Prudential Regulation Authority (APRA), the outcome of licensing the Islamic Bank Australia, was finally achieved on 5th July 2022.
Alhamdu Lillaah now there is a new bank; Islamic Bank Australia! So, to anyone, Muslim or otherwise, who wants to deal with a bank avoiding the zulm of interest, this is your bank!
Twelve years of my professional commitment, time and efforts were there on standby any way! The skills needed were: a Shari’ah graduate with Speciality on Hadith, Arabic and Islamic Studies, MA from the University of Sydney, coupled with a PhD on Islamic banking finance from the Law School, at Macquarie University Sydney.
But then came the most difficult question: Meeting the budget bottom line of A$ 20,000,000.00 (twenty million dollars) expenses. Who will put this money without the guarantee of a banking license? The professional services of top tier audit firms, such as EY and PWC needed to be hired.
To be honest, the proverb ‘beggars can’t be choosers’ had to be redefined and modified! May Allah reward the 13 seed funders led by Br A A M Zakaria, who trusted me and the cause, with their A$ 10,000,000.00 (ten million dollars) savings. They will go in the history book as the biggest part of the equation!
Mr Ramanathan Karruppia, is another friend who himself is an AML CTF auditor. He directed the mezzanine investor Br Mohammad Shazi, a successful businessman from UEA to IBA project. After three days of scrutiny in Sydney, this is what Br Shazi had to say to me on 16 January 2020:
“Dr Raashed! I spent three days with you and heard the story of IBA. I see no pricy shoes or neck ties on you! But I am convinced that you know what you are doing. I am also convinced that you are leading a team of trustworthy people. Here are the A$ 10,000,000.00 (ten million dollars) investment to realise the first Islamic bank in Australia”. His word ‘trust’ struck me just like a bullet! I will remember it for the rest of my life! Besides, I was highly impressed by the tagline on his business platform: “My word is my promise”!
Yes, collectively, they reveal the nature of the people who worked together, wrapping up the prime gift of Islamic Bank Australia to the fast growing Muslim community today!!! May Allah reward them all for this great gift and contribution! Indeed, this is the great outcome for which, every single investor, promoter, customer and shareholder be proud of.
As an ethical alternative, Islamic bank is not only for Muslims. It is for anyone who wants to deal with banking products without involving interest!
Although a decade of my intellectually productive life was invested in this venture, I am fully convinced that no better cause could have been there anyway! It was thus, a deliberate choice that could not have been shaken by the procedural difficulties, challenges and delays; come what may!
This is the project where, working for the cause of Da’wah ila Allah, met for me, with the mission of building a strong identity base for the Australian Muslims! In itself, this is a distinctly great cause!
Australia is the winner
By approving the license to the Islamic Bank Australia, the Australian Government/s have truly lived to its democratic values and ideals! Bravo to the nation Australia; the icon of fair dinkum! Through this experience, the Australian Muslims stand tall and proud for their identity as the citizens of this great country!
This is the country where we belong and this is where our loyalty squarely rests! Considering the Australian economy as a safe-haven for the stable quality assets, we envisage that there will be influx of overseas Islamic banks investing in the country, through Islamic Bank Australia.
Came with the above, are the lots of community emotion, aspirations, trust, and equality of all citizens before the law. The most important of all, is the enormous respect of Australian Muslims for the Australian government and its banking regulator APRA living true to their democratic ideals!
We appreciate that the most revealing word in our offering is the magic word “Islamic”. Naming the entity as “Islamic Bank Australia”, was thus, a deliberate choice.
With my cornerstone role as the founder of IBA through IFSA and IFSA Investment, I am the direct witness to all the motives, objectives, community emotions and expectations behind this project.
Obviously, the IBA Board and its C-suite will be very mindful to maintain this legacy and meet the public expectation without a compromise!
Many Muslims are still coming to terms that there is a new bank in Australia called Islamic Bank Australia! The Australian Muslims are exhilarated for their own bank being licensed. But the real challenge ahead is to prove what benefit, if any, the Islamic Bank Australia is going to offer to the overall and non-Muslim Australians.
In short, this new bank is going to bring diversity and competition in the market. In itself this is a win for the public.
As an alternative to the interest driven conventional banking, according to the Qur’an 02:279, the main objective of Islamic banking is to provide financial justice to all its consumers, regardless of their faith. The Bank Islam Malaysia’s majority customers are in fact non-Muslims.
The IBA Board and its C-suite will probably prove it as true also in Australia! This is the reason that our bank’s logo inculcates the main objectives as: “You, Ethics and Justice”, implying superior customer service, ethical banking and the commitment to provide financial justice by not dealing with interest.
In itself, the competition would benefit the overall market. But Islamic banking would also open up the Australian investment market to the untapped sources of resources and investments from the Middle East and the South East Asia.
As the Chair of the Shari’ah Audit Executives (SAE), I was directly involved in developing all the products of Islamic Bank Australia. In this space, I also confirm that all the IBA products do provide a ‘watertight guarantee’ of Shari’ah compliance.
While operating on the way ahead, with a board seat to guard the Shari’ah non-compliance risk, I am duty bound to deliver the Shari’ah trust invested in me without a compromise; insha Allaah!
Without a doubt I can also say that this guarantee alone is the most outstanding feature of Islamic Bank Australia. The community confidence aside, this feature would also deliver a great financial dividend- insha Allah to the investors in our bank.
Our journey has just started. Insha Allaah, the great outcomes are ahead waiting for all Australians!
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