Al Rayan Bank expert helps UK devise Shariah products to ensure financial inclusion
June 07 2016 10:46 PM
Alamad: Unprecedented response to Shariah-compliant student loans in the UK.

By Denise Marray/Gulf Times Correspondent /London

Financial inclusion for its entire population is at the heart of the UK government’s drive to make provision for Shariah-compliant financial products. The vision has motivated Dr Samir Alamad, head of Shariah Compliance and Product Development at Al Rayan Bank, to lend his expertise in advising the government to develop a wide range of products that meet the needs of British Muslims who account for 5% of the UK population.
The government’s announcement that Shariah-compliant student loans will be introduced through new legislation supported across the political spectrum, underscores the commitment to the ‘inclusive’ goal.
Alamad explained in an interview with Gulf Times that during the consultation phase on the Shariah-compliant student loans, there was an unprecedented response. Usually, he said, about 150-200 responses are received; but on this issue the government received some 20,000 responses with 93% expressing their support.
He said that the lack of Shariah-compliant student loans had caused problems for many Muslim students who had ambitions to go to university but felt conflicted over taking on an interest-bearing loan. Some had opted to postpone going to university in order to work first and save for the fees prior to taking up their studies. 
Others had attempted to try and cut the expense of their studies by opting for less expensive courses and institutions; the move is not always in their best interests.
Meantime, many students who had taken on the interest-bearing government loan felt unhappy over the clash with their beliefs.
Alamad pointed out that the situation became more difficult for Muslim students with the introduction of higher fees by universities. Fees of up £9,000 per year can be charged, so students graduate with considerable debts which they are required to start paying off once their post-graduation salary reaches a threshold of £21,000 per year.
“From 2012 there was Higher Education Reform where the cap for university fees was raised from £3000 per year up to £9000. When the fees were in the range of £3,000 Muslim students used to borrow this money from family members; or their parents helped them. They were able to sort it out. 
“But when the cap was raised to £9,000 and the student loans started charging a real rate of interest, many of them struggled and some didn’t go to university because they didn’t want to get involved in interest bearing loans. I was contacted by some students and Imams in the UK asking for my advice and help,” Alamad explained. 
Al Rayan Bank, formerly known as Islamic Bank of Britain, the first fully Shariah-compliant retail Islamic bank in Europe, was acquired by Qatar’s Masraf Al Rayan in 2013.
Upon joining the bank in 2007, Alamad who has extensive knowledge of the Shariah law and Islamic commercial law combined with a background in economics and finance, set about building a portfolio of financial products to meet the needs of the Muslim population. 
He advised the government on the structure of liquidity facilities to be offered by the Bank of England to Islamic banks operating in the UK. He worked closely with the designated person in the BoE to advise on two main structures, a commodity Murabaha and a Wakala-based structure. 
His work has been a key driver of a public consultation issued by the central bank in February 2016. 
Alamad is still involved in helping the BoE in this process and in setting up the subsequent operational processes to enable Islamic banks to benefit from the central bank liquidity facilities in line with the rest of the market in order to manage their liquidity and regulatory requirements. 
He has also been closely involved in advising on Shariah-compliant equity release for the elderly.
He explained: “The local authority will buy equity in the elderly person’s house; for example, if they need £20,000, the local authority will buy a portion of their house in order to release that money – so it will be like co-ownership in the house. 
“Then they can pay back the local authority and if there is any appreciation or depreciation in the property value the local authority will share that according to the proportion they own. If the elderly person passes away, the share of the equity can be taken from the estate. That was the model used for Scotland and we did something similar for England and Wales where we tried to keep things neutral in terms of the Care Bill in order to achieve the same outcome.” 
Alamad has also advised on the first cash ISA Shariah-compliant products, a home purchase plan and help to buy scheme and a full range of retail, investment and pension products. Muslim Aid, a charitable organisation, has welcomed the introduction of the Shariah-compliant work place pension. 
He also advised on the government’s successful issuance of its first sovereign sukuk which saw orders totalling around £2.3bn, with allocations made to a wide range of investors including sovereign wealth funds, central banks and domestic and international financial institutions.
Alamad credits the UK with playing a leading role in the provision of Shariah-compliant products. 
“The UK is way ahead: other European countries are taking steps but the UK government has been brilliant in this regard as their initiatives will help to eliminate many social problems. Instead of alienating certain communities, a better approach is to include them and make them part of the system. This will have a positive social impact on those communities,” he said.

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