DALLAS - May 9, 2000 could prove to be a historic day for both credit unions and Muslims throughout the state of Texas. It was on that date that members of the Dallas-Ft. Worth Muslim community met with Texas credit union authorities to discuss the possibility of setting up a very unique financial institution. So unique, in fact, that no credit union like it exists. This institution would lend to its members without charging interest. While such a practice is unheard of to the majority of Americans, it is an answered prayer for local Muslims. According to the Koran, the sacred book of the Islamic faith, Muslims are strictly prohibited from receiving or paying interest. The creed stems from a strong sense of community and the conviction of Muslims to contribute to that community. This includes financial contributions. An individual earning interest is looked upon as hoarding a valued commodity that could otherwise be used for the common good. When the ramifications of this Islamic tenet are examined, it becomes obvious that the things that most Americans take for granted are next to impossible for the devout Muslim. Buying a home or owning a car are distant dreams. Buying Homes Interest Free Ahmad A. Sbaiti, president/CEO of Alshall International USA in Dallas, is one Muslim businessman who wants to change all that. Sbaiti is one of 80,000 Muslims residing in the Dallas-Ft. Worth area. He is spearheading a grassroots effort to form a credit union that would cater to the special needs of the Muslim community. So how would it work? What would this credit union look like? While it's true that no credit unions in this country currently give non-interest loans to members, there are a few institutions that attempt to reach the Muslim market segment. The Bank of Kuwait, for example, operates a branch in New York City and had a representative present at the May 9th meeting. The planned credit union would start by offering only savings and checking accounts and later expand its offerings to include non-interest loans for cars, homes and businesses. The checking and savings accounts would not earn interest, but rather pay dividends - an acceptable form of profit under Islamic law. But how does one get around interest-based mortgages? This is where the Bank of Kuwait and other financial companies that cater to Muslims serve as a model. When buying a home, both the member and the credit union would make the purchase. The Koran dictates that borrowers cannot pay back more than the actual loan amount. So the credit union member would pay rent on the house and repay the credit union for its ownership share. Purchasing an automobile would be handled in a similar manner. There is one Islamic restriction, however, that has yet to be overcome, according to Sbaiti. Credit cards will probably not be offered by the credit union. This form of payment remains taboo for the faithful Muslim, since there is no way to guarantee that an individual will pay off the balance each month. Putting the Plan to Action Sbaiti's plan looks good on paper. But how does he intend to make it a reality? A group of like-minded Muslim businessmen have coordinated their efforts to lay the groundwork for this promising endeavor. The group has sought the assistance of Tom Hodge, vice president of the Texas Credit Union League's Credit Union Consulting Services and Sales, to take the necessary steps to establish this sorely-needed institution. Hodge was instrumental in arranging the May 9th meeting, which proved to be a turning point that would set the wheel in motion. Harold Feeney, Texas Credit Union Commissioner, was among those present. "The purpose of the initial meeting was to see if we had any adverse reaction to the formation of this type of credit union," Feeney explains. "They didn't want to go to the trouble of developing a business plan if we weren't in tune with what they are trying to do." Whether or not the Texas Credit Union Department is completely in tune with Sbaiti's group remains to be seen. But Harold Feeney is optimistic. The business plan and requisite documents will demonstrate the economic feasibility of the venture. "There is a great interest and apparently a great need for financial services," says Feeney. "So we sincerely hope that it would be viable." Now the organizers of this would-be credit union are hard at work developing the two-year business plan required in order to get a state charter. The Texas Credit Union League is coming alongside the group to get all their ducks in a row. Prior to writing a business plan, several things must be accomplished - like assembling a board of directors. A field-of-membership must also be defined and approved. Along those lines, surveys have been sent to Muslim individuals in an effort to ascertain the interest level in the community. Tom Hodge would like to see 300-500 of these surveys returned to get a representative sampling. It is the desire of the organizers that the new credit union open its doors to the 80,000 members of Muslim mosques throughout Dallas County. Hodge's concern is that this may be a bit ambitious. He would rather see the charter limited to four or five mosques and expand when the credit union is ready for growth. However, he says if enough interest is generated, it would be difficult to discourage the group from seeking the full field of membership. Finally, three primary expenses of the undertaking must be addressed. There is the overhead associated with paying employees, installing and maintaining computer hardware and software, and the physical location of the credit union. Once the research is done, Sbaiti will contact Hodge to take the next step. "We might even be able to submit the plan to the state before the end of this year," says Hodge. If so, Sbaiti's goal of opening the credit union in the summer of 2001 just might come to fruition. With it would come life-changing opportunities for a group of Muslims for whom the advantages of car and home ownership were previously unavailable. -
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