First Islamic bank in Australia?

MCCA announces Islamic bank ambition

By Alison Bell Available at

Local Islamic banking co-operative, the Muslim Community Co-operative (Australia) Ltd (MCCA) is confident of securing a banking licence in three years to become Australia’s first Islamic bank. MCCA managing director Chaaban Omran said the co-operative would work with the Australian Prudential Regulatory Authority (APRA) to transition its current registrable superannuation entity (RSE) licence into a banking licence.

“We are (currently) regulated by ASIC (the Australian Securities and Investments Commission) and are the holder of a RSE licence. “The way the supervision will work will be a modification of that particular licence,” Mr Omran told business leaders at an Islamic banking and finance conference in Melbourne. “If we get enough momentum from the industry it may be less than three years,” he said. In four years MCCA plans to have a presence in the investment banking sector, he said.

MCCA was established in 1989 and provides property finance and is now setting up a superannuation investment mandate and plans to build funds around that mandate. “The investments are the most critical thing for us,” Mr Omran said, adding that MCCA was also planning to launch a range of equity investment funds.

“We have a lot of challenges. Apart from capital requirements, there are issues to do with how we manage cash for example because APRA requires a certain level of funds to be invested. r Omran said there are around 500,000 Australian Muslims forming a market worth $1.3 billion.

MCCA complies with Shariah Islamic law that prohibits all forms of interest charges. Islamic banks are governed by a supervisory board of Muslim clerics to ensure compliance with Shariah law as well as banking regulations in the countries in which they operate.

Islamic finance does not recognise the concept of caveat emptor (“let the buyer beware”) in which risks can be transferred to unsuspecting buyers of products and services, says PricewaterhouseCoopers’ head of Islamic finance, Mohammed Amin. Shariah-compliant finance is innovative, ethical and has been tried and tested throughout the centuries, Mr Omran said. “We’re not dealing with a new concept. The only difference is that the awareness has not been raised in Australia.”

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