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Six Things You Need To Know About Islamic Banking In Britain

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DAVID CAMERON ISLAMIC FINANCE
British Prime Minister David Cameron addresses delegates at the 9th World Islamic Economic Forum in London on October 29, 2013. It is the first time that Forum has been held outside a Muslim country. AFP PHOTO / ANDREW COWIE (Photo credit should read ANDREW COWIE/AFP/Getty Images) | ANDREW COWIE via Getty Images

The Treasury has just sold £200 million worth of Islamic government bonds, known as "sukuk", in a bid to make Britain a global hub for Islamic finance, with it now the first country outside the Islamic world to issue bonds.

This is all part of the coalition's mission, as Prime Minister David Cameron revealed last year, to make London the "capital for Islamic finance", after launching an Islamic index on the London Stock Exchange.

"I want London to stand alongside Dubai as one of the great capitals of Islamic finance anywhere in the world," he added.

Islamic finance is open to everyone, not just Muslims. The Islamic Bank of Britain enjoyed a 55% increase in applications for its savings accounts by non-Muslims in recent years.

No idea what this is all about though? HuffPost UK explains the six key things you need to know about Islamic finance.

  • 1
    Payday lenders would hate Islamic finance
    Payday lenders, like Wonga, which rely on interest repayments for their profit, would not be allowed under Islamic law - which bans the taking and receiving of interest. Islamic bonds are structured so investors get a fixed return, like rental income, from an asset or service.
  • 2
    Islamic banking has been in Britain for over 30 years
    Islamic finance reached the UK in the 1980s with the first commodity, Murabaha transactions, which has the seller add the cost he has incurred to a commodity in a mark-up which is known to the buyer. The first Islamic bank launched in the UK in 1982, Al Barakara International.
  • 3
    Islamic banking has its own ethics
    You can't invest in gambling, pork, pornography, alcohol and drugs.
  • 4
    We're already advising on Islamic finance
    London has the largest legal services market in Europe, and so over 25 firms in the capital are supplying legal services for Islamic finance in the global and domestic market.
  • 5
    Islamic finance has helped bring some London icons
    You have it to thank for funding whole or in part the Shard, Chelsea Barracks, Harrods and the Olympic Village.
  • 6
    Islamic banking is going to be MASSIVE
    Islamic investments are expected to grow to $1.3 trillion this year, with the market having soared by 150% in the past eight years. Britain's Muslim population have a combined spending power of £20 billion as well.

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