London-based P2P lender Loanpad is seeking to make its platform more inclusive by potentially including Shariah compliant products in a bid to appeal to Muslim investors and borrowers.
The P2P lender is already compliant with Jewish interest laws which prohibit a person of the Jewish faith charging or paying interest to or from another person of the Jewish faith.
“In order to make the platform permissible to persons of Jewish faith, Loanpad uses a globally recognized solution, a ‘Heter Iska’, to enable any investment or transaction made only by a person of Jewish faith to occur without incurring the prohibition of charging or paying interest to another person of Jewish faith,” according to Loanpad.
A Heter Iska, as explained by Patron Law, is a Jewish religious compliance document operating as an addendum to any other lending or security documents entered by the lender and borrower, who are both of the Jewish faith, to comply with their religious rules.
Founded in 2015 by real estate finance lawyer Louis Schwartz, Loanpad operates a P2P model allowing investors to earn interest through lending their money directly to borrowers for property acquisitions. It also provides an individual savings account solution.
“Loanpad wants to make its platform accessible to persons of all faiths,” it said. “We are looking into a solution to enable Loanpad to be fully compliant with Shariah law.”
The firm did not specify a timeline for its Shariah compatibility endeavor.
According to statistics provided by Loanpad, it has GBP155.39 million (US$195.45 million)-worth of live loans as at the 6th September 2023, with a 42% average loan-to-value ratio and a 0% suspended loan rate.
There are seven crowdfunding and P2P platforms in the UK which offer Shariah compliant solutions, according to the IFN Islamic Fintech Landscape as at the 6th September 2023.