The first child trust fund which complies with Islamic law was launched last month.

Friendly society the Children’s Mutual has created a fund for children of Muslim families that is in line with Islamic sharia law.

Sharia principles forbid Muslims from either receiving or paying interest, meaning they cannot put money into a traditional savings account, or many of the savings account style child trust funds (CTFs) offered by building societies and banks.

Sharia law also dictates that Muslims cannot invest money in companies that are involved in tobacco, alcohol or pornography.

The Children’s Mutual’s new CTF is an ethical fund which invests in the shares of companies around the world that are not involved in any of the banned activities.

“All parents, from every community, should have the opportunity to give their child a financial springboard into adult life,” said David White, chief executive of the Children’s Mutual. “Working with the Muslim community to launch this stakeholder account means the child trust fund is now a truly universal product.

Until this year only one in five families were saving for their children, we want to give five in five families the opportunity to put money away for their child’s future.”

Iqbal Asaria, member of the governor of the Bank of England’s working party on the introduction of Islamic finance in the UK, added: “The launch of a sharia-compliant child trust fund is particularly welcome as it will enable the Muslim community to wholeheartedly participate in this important initiative.

For the first time, Muslims will be able to invest for their children in keeping with the tenets of their faith right from birth.”

The new fund, which has been set up with the help of a panel of specialists in Islamic finance law, will be available from September 2005.

CTFs are available to all children born on or after September 1 2002. Parents of these children receive £250 in vouchers to open accounts, with those from less well-off homes receiving £500.

Friends and relatives can add up to £1,200 a year to each child’s account. This will be topped up with an additional amount, also likely to be £250 or £500, on the child’s seventh birthday.

Islamic finance has moved into the mainstream in recent years, with high-street banks HSBC and Lloyds TSB among the organisations that now offer sharia-compliant investment schemes.

www.awaaznews.com