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NAB will move into Islamic lending through the launch of interest free loans that comply with Muslim Sharia law.
The loans will generate revenue for the bank through profit-sharing on the transaction, joint ventures or leasing-type arrangements – which are allowed under Sharia law.
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The products will also be available to non-Muslims.
The bank’s head of community finance and development Richard Peters said the move into Islamic lending would be trialed first, The Daily Telegraph reported.
"We are dipping our toe in the water with this scheme and thought we may be able to offer this product in high-density Muslim areas," said Richard Peters, head of community finance and development at NAB.
"We suspect there is demand out there, but we don't know how big it is, so we will trial a few products first," he said.
During the trial NAB will spend $15 million from its non-profit finance division on the program, which will distribute the funds through various community finance schemes around the country. The bank will then monitor the take-up and assess potential demand for the products.
The bank will also need clearance by the Sharia Advisory Board to ensure it meets strict criteria before launching the new products.
