A group of Muslims from the Houston and Dallas areas have submitted an application to charter a new credit union, Jafari No-Interest Credit Union, which they hope to operate out of Houston, the Texas Credit Union Department said.
According to Betsy Loar, assistant commissioner and general counsel for the Texas Credit Union Department, Jafari No-Interest CU would operate on a fee basis in lieu of charging interest on loans and paying interest on accounts.
She said the agency is currently reviewing the application and requesting additional information.
“In order for the department to approve an application for a new charter, the applicants must show that the credit union will be viable,” Loar said. “That is, the applicants must present a business plan showing how the credit union will become profitable within a reasonable period and how it will be funded in the meantime.”
The applicants will also need to receive share insurance approval from the NCUA, she said.
The proposed credit union intends to serve Muslims residing in Houston, Dallas and Austin who follow the Jafari School, commonly known as Shia Muslims, according to the agency.
Jafari No-Interest CU wouldn’t be the first credit union with some or all of its services designed especially for Muslims. In 2010, the $214 million, Totawa, N.J.-based North Jersey Federal Credit Union developed a banking division that complies with Islamic law, or Sharia, which prohibits Muslims from paying or receiving interest.
The $62 million, Sugar Land, Texas-based Pioneer Muslim Federal Credit Union was formerly a state-chartered credit union and recently converted to a federal charter, Loar said. She noted that the Texas Credit Union Department does not currently regulate any Muslim credit unions in the state.