Maisam Fazal

Sharia-compliant P2P lenders could enter market, banker reveals

Sharia-compliant peer-to-peer (P2P) lenders could soon be coming to market, an Islamic banker has revealed.

Speaking to Bridging & Commercial, Maisam Fazal, head of commercial finance at Al Rayan Bank, acknowledged that there may be a gap in the market for alternative finance models such as P2P lending.

“There are a lot of deals that come to us that we cannot do because of our policy, because of our guidelines and because of our risk appetite,” Maisam explained.

“I know I have a lot of contacts working on [Sharia-compliant P2P] right now, trying to get this on the market.”

Despite welcoming more firms to the Islamic finance market, Maisam suggested that rates as low as Al Rayan’s could make it off-putting for potential new entrants.

“I’d be very happy to see more competition.

“If you look at our rates, they have been reduced to as low as 2.44%, which is very competitive in this market.

“So, there will be a heavy deterrent for people to come into the market, because when you come into the market you expect to make profits.”

Maisam explained that having competitive rates was paramount for Islamic finance banks, as the cost of funding could make products more expensive.

“What you can’t do is be out there and say: ‘Look, because we offer Islamic we have to be expensive.’

“There will be times when we are expensive for certain products, but that just depends on our cost of funding and our client.

“However, by contrast we are able to offer some of the most competitive savings products in the country; indeed, since January 2012 at least one Al Rayan Bank product has topped the Moneyfacts ‘Best Buy’ table.”

Maisam claimed that the UK’s Islamic banks are hindered as they cannot access the Bank of England’s Funding for Lending Scheme (FLS).

“Banks of a similar size to Al Rayan Bank have used FLS to provide funding to UK businesses at a lower rate than would otherwise be possible, but we are unable to do this as the scheme is not Sharia compliant.

“However, we still aim to make Islamic finance as accessible to as many people as possible.”

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