UK high street bank Lloyds TSB has launched a Shariah-compliant nostro account that enables customers to transfer money around the world in line with Islamic principles.
The new account does not pay interest or provide an overdraft facility, in line with Shariah law. In addition, the account prevents any funds being invested in industries - such as alcohol and gambling - that are prohibited under Islam.
Lloyds TSB says the account, which is aimed at the UK's two million Muslims and 100,000 Muslim firms, is the first of its kind to be offered by a mainstream western bank.
Whilst many Muslim customers make and receive international payments through an estimated 250 Islamic banks worldwide, the process of transferring the money between banks has not been in line with Islamic principles, says the UK bank.
"We've designed this account to help the growing number of Islamic banks across the world, which deal with our customers' transactions," says Diana Brightmore-Armour, CEO corporate banking and co-head corporate markets, Lloyds TSB. "We're providing the missing link in the chain, so now any person or business receiving payments from abroad into their own Islamic account knows the money will be dealt with according to Islamic law, from start to finish."
In the last two years Lloyds TSB has introduced Shariah-compliant current and business and corporate accounts as well as a mortgage product and investment fund.