Interest banned, profit encouraged

The quick growth of Islamic funds is perhaps explained by the necessity of investment in Islam and the religious prohibition of interest. Islam has been described as a 'capitalistic' worldview. Because the tax is charged on capital rather than on income, capital must be invested. If one keeps his capital idle for 40 years, it 'will disappear.' It has been figured that the sum of possible deposits in Saudi Arabia and the Gulf countries is perhaps $40 billion or even twice that much. Islamic institutions are now looking to expand the breadth of their services. Western banks, for example London's Kleinworth-Benson, are now offering Islamic products. The investments they participate in are characteristically short-term ones. Amongst U.S. banks dealing with Islamic funds are Citicorp and Chase Manhattan. The Faisal Islamic Bank's shares will shortly be on the local Bahrain market. Al Rajhi recently had a hand in a $50 ijara deal with the Shipping Corporation of India.