Britain plans to issue Shariah bonds

Britain’s Treasury is likely to back plans to issue Shariah law-compliant bonds, officials said Sunday – amid continuing debate about the application of Islamic laws in the UK. Treasury chief Alistair Darling, who will present his annual budget on March 12, plans to issue the Islamic bonds, known as sukuk, to tap into a fast-growing market in the products. “We want the City of London to be one of the gateways globally for Islamic financial products,” a Treasury spokesperson said, on customary condition of anonymity in line with policy. “Just because of your faith, there shouldn’t be any issue about your access to financial services in the UK,” he said. Shariah law prohibits charging or paying interest, which has led to the growth of a market in financial services created to be compliant with Islam. Sukuk are structured as profit-sharing plans so that the bondholder’s income resembles a rent payment. The process is usually blessed by a board of religious scholars affiliated with a bank.