Lloyds TSB is increasing the number of UK branches offering Islamic banking services. Branches in Newcastle, Preston, Sheffield, Bastwell and Sparkhill in Birmingham have started offering the products, including a current account and home finance, designed to meet the banking needs of the UK’s two million Muslims for whom interest is forbidden.

Lloyds TSB says a total of 22 branches across the UK now offer Islamic banking services, and several more branches will do so by the end of the year. Since launching in February 2005, the pilot has been extended to many towns and cities across the UK.

Paul Sherrin, head of Lloyds TSB Islamic Financial Services, said, “This is yet another milestone on the road to making Islamic banking available to all Muslims in the UK. There is now a real choice on the high street for Muslims who want an alternative to conventional current accounts and mortgages and we’re proud to be able to give these customers something we know that they will value.”

Company officials say the current account complies fully with Islamic law (Shariah) which forbids both the payment and receipt of interest, known as Riba. The current account offers no credit interest and has no overdraft facility, but it does provide a debit card and unlike some other compliant accounts, does not charge a fee or require a minimum balance. The funds held by on all Islamic current accounts are held in accordance with Islamic law, Lloyds TSB explained.

Similarly, Lloyds TSB says its home finance product is not based on interest payments. Instead of lending money for a property purchase, the bank buys the home outright, contributing up to 90 percent of the purchase price. The customer then pays the remaining percentage upfront and repays the outstanding sum over an agreed term, together with a rental payment.