Untapped market in sharia finance
Sonny Bill Williams could find his rugby career significantly curtailed if he refuses to support any sponsorship that runs contrary to his Islamic religion.
Williams taped over the Bank of New Zealand logo on his collar in his first game for the Blues.
New Zealand Rugby revealed that Williams has lodged a conscientious objection in his contract to finance companies, banks, alcohol companies, tobacco companies and gambling companies.
Williams is Muslim and paying or receiving interest on loans is forbidden in Islam.
Sharia, or Islamic law, governs all aspects of Muslim life, and imposes restrictions on finance and investments within the Islamic tradition.
The central tenet is that the use of money for the purpose of making money is forbidden. Wealth must be generated from legitimate trade and asset-based investment.
Investors are also required to invest in things with social and ethical benefits. They usually avoid weapons, pornography, alcohol and gambling.
Victoria University religious studies professor Paul Morris said insurance was also potentially a problem – meaning Williams might object to playing at AMI Stadium. The Blues sponsored by insurer NIB.
He said there were more Islamfriendly finance options becoming available worldwide.
If they offer a mortgage, Islamic banks can profit by helping customers purchase a property by either charging rent or having the customer pay off a larger loan than the market value of the property.
For savings accounts, banks offer to invest money in compliant investments and return a target profit, rather than interest. Some providers also charge ‘‘purification’’ fees. are also
Morris said New Zealand financial institutions were exploring sharia-compliant products.
There are more than 900 members of New Zealand’s Amanah Kiwisaver scheme, which is sharia-compliant. But Massey University banking expert Claire Matthews did not expect the products to become mainstream. ‘‘I think there is a growing market in New Zealand for these types of products, so that could encourage it. However, they … can create some challenges to operate within an existing banking organisation, particularly because the funds could not be intermingled.’’
New Zealand Bankers’ Association chief executive Karen Scott-howman said banks were constantly responding to customer preferences.
‘‘That’s certainly the case with mobile and internet banking. We’re not seeing that kind of demand for sharia-compliant banking here.’’