Slightly off topic, but perhaps it is still marginally on topic because it's about a Bitcoin-oriented business:

IBB is an "Islamic bank, acting according to the Sharia (Islamic law), charging 0% interest on BTC loans".

Is it a profit-oriented business? A charity? Does it make money? Where do its budget come from? (I saw they're advertising on the Bitcoin forum today)

I know they issued some GLBSE stocks, that might explain the source of the money - are Muslims effectively "donating" to this bank by purchasing stocks?

3 Answers 3


As stated by what appears to be the founder (or a key person) in this thread in the bitcointalk forums, calling himself senbonzakura: "profit from the bank must be halal (permissible). So if the bank lends at interest, the interest then is profit for the bank, and that would mean muslims(or jews/christians) cannot buy shares in the company as the bank deals with interest, which makes it non-permissible/haram."

The motivation for running the IBB seems to be somewhat charitable, with this (edited) comment from the same person: "The problem that those 3 religions is trying to solve is human greed. Under that philosophy it does rightly condemn interest, for the reason that interest places the 'haves' infront of the 'have nots'.... From a humanitarian-philosophical perspective [the IBB] makes perfect sense, from a capitalist perspective it doesn't".

However, it is being run as a business. The IBB website says it's listed on the GLBSE, and it has asset, revenue, and dividend figures. The website doesn't go into much detail about what the bank does, but if you were to read the above linked forum thread you'd probably learn a lot more about it. Since the bank is paying out dividends, I doubt that those purchasing stock in IBB are doing it purely as a donation.

So, to summarise:

  1. The IBB is profit based, but doesn't earn money from interest.
  2. If you assume their revenue chart is accurate, it earns money
  3. Their revenue stream includes (complete list so far): Shares/Dividends, Arbitrage, Gratuity
  4. Even though IBB doesn't charge interest, they accept donations from borrowers. Depending on the culture of the customers, this could be considered to be like making optional interest payments.
  • What do you mean Jews/Christians? I'm not aware of any similar low in Judaism. Well, there's something about not giving loans ... but it's rather vague, and I don't believe it's actually followed.
    – ripper234
    Jan 19, 2012 at 8:22
  • Interesting answer btw.
    – ripper234
    Jan 19, 2012 at 8:24
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    The Jews & Christians bit is a quote from the founder. If that's not clear, I haven't worded it well. Rewording now... Jan 19, 2012 at 8:38

This Wikipedia article on Islamic Banking might explain how IBB works, at least if it follows in the pattern of such banks. Generally, one doesn't charge interest because it is not sharia-compatible, but it's okay for the bank to buy what you want, and then sell it to you in instalments at a higher price. It's like saying: "I'll give you this 100$ bill, and you can pay me back at 0% interest in 10 instalments of 11$". Here's an explanation from Wiki:

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the bank's profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral.

  • 1
    Weird. But still, I haven't seen any text to explain that this is how IBB operates - I'm asking specifically about them.
    – ripper234
    Jan 19, 2012 at 8:21
  • I have. It's essentially quoted here bitcointalk.org/index.php?topic=21732.msg278092#msg278092 : "The borrower only needs to pay back the amount owed to the lender, but the borrower can choose to pay the lender a small amount of money to serve as a gratuity" Jan 19, 2012 at 8:45
  • These are exactly interests, which just "happen" to not be called such. Cheating at its worst. (talking about the answer, not about Highly's comment)
    – o0'.
    Jan 19, 2012 at 9:39
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    It might be the difference between a fixed fee versus ongoing cumulative interest. The former is a known fixed quantity, the latter is usury. See en.wikipedia.org/wiki/Usury
    – Gary
    Jan 19, 2012 at 11:21
  • It's not really the same as interest if it's optional. If a culture develops that makes it socially unacceptable to not pay it though, then it becomes essentially the same as interest. Jan 19, 2012 at 18:35

usury is forbidden in muslim religion/as it was in christianity as this creates wealth based on accumulating interest paying 3 fold or more if you default and % can change..muslims believe if i lend you 10$ i expect back 10$ no interest for the loan.but trade is encouraged i.e you buy an item and sell to me at a profit this encourages trade and society and the amount you pay back is known,fixed.i think IBB are trying to follow this model..but they seem to follow the base rate as a refference point

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