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Sunday, 2 December 2007

Shariah compliant credit cards

KARACHI: Multinational Standard Chartered Bank (Pakistan) is the first to introduce Islamic credit cards in Pakistan. Its Saadiq VISA Credit Card is the country’s first Shariah-compliant Riba free (interest free) credit card, approved by an independent Shariah Supervisory Committee.The aim of introducing this Islamic card is to facilitate Muslims who would like to use credit card facilities according to the laws of Shariah as they avoid conventional credit cards due to religious preferences, say its promoters. Also, the card aims to facilitate those customers who are not satisfied with paying interest for their usual cards. The Islamic card operates on ‘Ujrah’ (Islamic mode of finance) concept which is based on fee structure meaning that only a fixed fee will be charged to the customer. The card would not be imposed with any floating percentage fee dependent on the outstanding balance.These cards were developed by an international team of professionals with Islamic financial expertise who ensured that these credit cards were within the guidelines on Islamic finance. Of the initial team, two international Shariah advisers cleared its authorisation namely Dr Sattar who holds the positions of Shariah adviser and director, Department of Financial Instruments at Al Baraka Investment Co of Saudi Arabia, and Sheikh Nizam Yaquby, who is an Islamic scholar from Bahrain.Apart from what has been mentioned above the entire fee structure is based on fixed fee unlike conventional cards where fee is a percentage of the outstanding amount or transaction amount.The customer would have the option to pay any amount less than the total outstanding balance (keeping the minimum payment at 5 percent of the balance, or a fixed amount, whichever is higher.) The remaining outstanding balance after the payment would be transferred to his Service Account which is a fixed monthly fee. —Faryal Najeeb (TIN, 2 Nov 07)

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