South African bank to offer Islamic mortgages
Upcoming changes to tax rules in South Africa have prompted Absa Islamic Banking to announce plans to offer Islamic mortgages in 2011The firm, which is a division of the country's third-largest bank Absa, will introduce the products once the Treasury Department stops charging tax on three Islamic structures, Bloomberg reports. Amman Muhammad, Managing Director of Absa Islamic Banking, was quoted by the news source as saying the financial institution wants to be able to offer the homeowner loans "the minute" the alterations are implemented by South Africa's Finance Minister Pravin Gordhan.
"The tax amendments level the playing field, so if a customer chooses to bank Islamically, there should be no extra burden from a tax perspective," he remarked, adding the changes are expected to be in force by February at the latest. All of the financial products offered by Absa Islamic Banking are compliant with Shariah law, meaning they offer a return on investment for the customer without being based on interest.