Premium Bonds and Islamic Law
Premium bonds have been debated for decades over their ability to actually beat out interest bearing savings plans and conventional banking practices. Premium bonds allow the bond buyer to participate in a monthly lottery that picks out individual bond numbers. If your bond number is picked you are awarded a cash prize that can range from fifty pounds to a million pounds. Your investment is safe and the government uses the money to fund public projects. There have been conspiracy theories and other grumblings about the premium bond system and now there are religious concerns.
A recent ruling in the Islamic world has made premium bonds ownership against Islamic law. Muhammad Adam al-Kawthari has interpreted the Koran in stating that contrary to shares, premium bonds are a loan instead of a partial owning of a company as in shares. The act of making money off of your own money in the form of interest is considered usury and takes away from the pillar of faith that represents being charitable. Islamic scholars have declared all bonds that produce interest as unlawful. Even a premium bond cash prize is considered apart of interest and cannot be allowed.
Is the Islamic religion is against premium bonds, imagine what the sales with be like if it was suddenly made lawful. The sale of bonds would go up and the odds would be skewed a little. The Moslem population in Britain might bring many millions of pounds into the government coffers. The funds generated could help Britain pay its war debt and at the same time finance British troops occupying Islamic countries. The Cleric might have made the decision to degree premium bonds unlawful for this very reason. It might be a good idea for the National Savings and Investments or the government to issue a statement that the funds will not be used for military or war funding.
The government is working on a way for the Islamic citizens to be able to participate in the premium bond programs. The Islamic financial systems work on investing on a fixed asset and even Pakistan has Islamic bonds issues to finance its roadways. If the British government figures out a way to do this then they will be able to be the first Europeans ever who are able to allow the Islamic world to participate in the premium bond market. This will boost sales and allow the British Islamic citizen to have fun and save their money in a secure way.
The National Savings and Investments are running against other investing firms that are trying to secure financial relationships with the Muslim communities. Lloyds TSB, one of the largest banks in the country, announced that they have structured Islamic accounts that will be offered to Muslim investors. The account will remain respectful to the Islamic law and at the same time give the investor a secure way to keep their money in a bank and earn money without the idea of interest. Premium bonds may not be the allowed in the Islamic world, but new plans are on the way.