LUTON, Britain, July 8 (IslamOnline.net & News Agencies) – HSBC banking group has become the fist high street bank in Britain to offer mortgages and current accounts in accordance with Shariaa (Islamic law), a British news paper said.

The HSBC plan will allow Muslims in Britain to buy a house without having to pay or receive interest, which is prohibited in Shariaa, Bedford Today newspaper said.

Under the new scheme, the bank will buy the property outright on the customer’s behalf and lease it back to them for an agreed term, usually 25 years, the same period as a traditional mortgage.

The customer will make monthly payments made up of rent and contributions towards the purchase price.

Muslim leaders in the British town of Luton, the historic county of Bedfordshire, have given, however, a cautious welcome to the HSBC decision.

“I have not studied the plan in detail, but I think it is encouraging, it is a step in the right direction, although I think there should be more of a profit-sharing element to it,” said Mohammed Bashir, a Luton councilor representing the Dallow ward in Luton.

“The launch of these Islamic finance products by HSBC is welcome news for many thousands of Muslims who regularly battle with their consciences when it comes to making financial decisions,” the BBC News Onlilne quoted Iqbal Asaria, the spokesman of the Muslim Council of Britain, as saying.

“Some (Muslims) are wracked with guilt because they have broken Islamic law. While others’ values are beyond question, they are more pragmatic in order to keep a roof over their family’s head.

“HSBC’s initiative frees them from this dilemma and is the first step to delivering a level playing field for Muslims seeking financial solutions in the U.K.,” he added.

The current account and mortgage products are to be introduced in selected HSBC branches from 14 July, the BBC said.

HSBC’s Asia-Pacific chairman David Eldon said previously that the bank would like to expand a London office, which currently offers advice to Muslim clients.

“If we introduce Islamic banking products into this market which find acceptance from the customers here, yes, we would be interested,” he said.