The Islamic Nostro Account1 is the first of its kind to be offered by a mainstream Western bank and is a Shariah compliant version of the account used by all banks to distribute payments to customers across the world. Whenever individuals or businesses send money to other countries, the payments are made from one bank to another and are passed through a Nostro account in the process.
The new Lloyds TSB account is designed to ensure that the UK’s two million Muslims and 100,000 Muslim firms can make and receive international payments without compromising their faith. Many of these customers regularly make, or receive, international payments through the estimated 250 Islamic banks worldwide. However, until now, the process of transferring this money between banks has not been in line with Islamic principles.
The Nostro account adheres to the principles of Islamic law, because it does not pay interest on money banks hold in the account; it does not provide an overdraft facility; and it does not allow any of the funds held to be invested in industries – such as alcohol and gambling – which are prohibited under the rules of the faith2.
Diana Brightmore-Armour, CEO Corporate Banking and Co-Head Corporate Markets, Lloyds TSB, said: “Lloyds TSB has established itself as one of the leading providers of Islamic finance across the UK. But we are now seeing a rising demand, from Muslim businesses and personal customers, for Islamic banking across borders.
“We’ve designed this account to help the growing number of Islamic banks across the world, which deal with our customers’ transactions. 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.”
Simon Ratcliff, Head of Operations, Bank of London and The Middle East plc, said: “This account is a real milestone for banks like ours and means we can give our customers reassurance that their money is being dealt with according to Islamic law, from the moment it leaves their account to the moment it reaches its destination.”
The account adds to a suite of Islamic products and services3 Lloyds TSB has launched in the past two years, as it spearheads London’s drive to become a global centre for Islamic Finance. Last year, the bank launched a series of products including a current account, business and corporate account, mortgage and investment fund – each designed according to the principles of Islamic law.
The global Islamic financial services market is now worth an estimated $480 billion – and is growing at almost 15 per cent a year. As the range of Shariah compliant products and services widens, with developments such as the Nostro account, the market is expected to grow even further.
For further information customers can call the Islamic financial services line on 08456 007 786.
For more information:
Lloyds TSB Press Office
Tel: 020 7356 1878