For Muslims living in Canada, it has always been a far-fetched dream to buy a home from a company that abides by Islamic law that prohibits riba, or bank benefits.
Finally, and after long years of renting houses, Muslims in Edmonton are now relieved thanks to the formation of Canada’s Halal Financial Corp, The Globe & Mail reported.
The new startup is trying to meet some of the homeownership demand in Alberta’s Muslim community.
📚 Also read: What is the difference between Islamic credit and Riba?
The company, based on two fatwas, one by Al-Azhar and the other by an Al-Rashid Mosque committee, was founded by Thomas Lukaszuk, a former provincial MLA and cabinet minister, and John Stainton, a businessman and lawyer .
“This is the fastest growing segment of Canada’s population that has been excluded from Canada’s housing market,” Lukaszuk said. “It is personally very enriching. But it took a lot of effort.”
Check-Fat was obtained from Canadian Halal Financial Corporation
In Islam, profit-oriented loans are always linked to real economic activity such as products, services and benefits.
The buyer, investor or financier is guaranteed a return based on the profit made through this real activity. It is not possible to grant a loan for a profit that is not a direct share of the return on real activity.
As with an interest-based loan, a repayment obligation arises without reference to real economic growth. For this reason, Islam forbids this and allows alternative instruments such as cost-plus-deferred payment (Bay’ ajil) and goods advance payment (salam).
Imam Mahmoud Omar, who traveled to Egypt to seek approval from scholars at Al-Azhar University, said the establishment of the company was “a great achievement and big news”.
“Imagine someone has been renting for the last 20 years and it’s like you finally made it possible for me to own my house. It was an emotional time,” added Imam Omar.
One buyer, Nadeem Rahman, came to Canada in 1998 and has been renting a home since arriving in Edmonton in 2021. He said he has a mortgage from a company recognized by his mosque and Al Azhar and a prescription signed by a doctor.
“I can take this drug,” he said. “That takes the load off us. There is a very big and strong confidence to walk with them. … It’s like a big door being opened for many people.”
Islamic finance has grown rapidly around the world in recent decades and has become one of the fastest growing financial industries.
Today, it has more than $2 trillion in global wealth and is expected to reach $3.8 trillion by 2023.
Sharia-compliant finance differs from conventional banking in important ways, most notably the ban on charging interest and investing in ethically compliant companies.
Islamic banks and financial institutions are not allowed to receive or provide funds for anything related to alcohol, gambling, pornography, tobacco, guns or pork.