Despite hopes of a resurgence in the US market in the wake of an improved economic climate, with optimism over growth in the Islamic finance sector, recent reports suggest that the market remains stagnant with little real activity being observed.
Haseeb Fatmi, a corporate litigation attorney with Littleton Joyce Ughetta Park & Kelly in New York, told Islamic Finance news that: “I have been observing quite a bit of demand for Islamic finance in the US, primarily long term retirement, insurance, and checking/savings accounts.” However, the market remains slow, “The only types of transactions I’m seeing however deal in real estate, namely mortgaging property and estate planning, and even those types of transactions are scarce.”
There is no doubt that the market is there, with The American Muslim Council (AMC) estimating the US Muslim population at around 5-8 million, with the highest concentrations in California (1.2 million) followed by New York, Illinois and New Jersey.
Several smaller banks and community institutions now offer Halal mortgages and other retail products, including California-based Lariba, the oldest community-owned Islamic finance company in the US, and Ameen Housing Cooperative. However, their scope is limited and has yet to reach the mainstream.
A recent report from the Second Harvard University Forum on Islamic Finance on ‘Islamic Mortage Financing in the US: Providing an Alternative to Traditional Mortgages’ notes that: “Most of the Muslims in the US have been integrated in the Ribawi (interest-based) conventional banking system… For an emerging alternative system to prevail and succeed is a very difficult battle. Unless an individual is motivated deeply by the strict adherence to the Quran, Sunna, and Shariah, it is almost impossible to capture people’s interest and imagination.”
Regulations in the US, including restrictions that do not permit deposits to be at risk (this preventing profit and loss sharing schemes) and that prohibit banks from purchasing or holding the title of real estate to secure debts for more than five years (restricting the growth of home finance products such as Murabahah), also limit the possibilities for retail products in the country. — LM