AIB is set to become the first Irish banking institution to introduce sharia-compliant financial packages for Ireland’s growing Muslim community.

AIB has recently begun talks with the Islamic Cultural Centre (ICC) — the representative body for Ireland’s 20,000-plus Islamic community — to supply tailor-made mortgage deals for prospective Muslim homeowners.

Traditional mortgages are a religious obstacle to Muslims who want to buy a home in Ireland because paying or charging interest is prohibited in Islamic law. There is also a ban on gambling, which can make it difficult for Muslims to get conventional insurance cover.

“This is only the beginning” said Dr Nooh al-Kaddo, the executive director of the ICC, who wants Irish banks, businesses and the legal profession to tackle the challenges presented by onerous Islamic finance rules.

“Our community is getting so big,” said al-Kaddo. “We are settled now, so like everyone else, we want to buy our own homes and start our own businesses in accordance with our religion.”

The interest in Islamic finance has soared in Britain and Europe. Last year, the British government abolished double stamp duty on sharia-compliant mortgages and the government urged banks to create financial solutions for Muslims. AIB, which said that talks are at an early stage, is monitoring the work of HSBC, one of Britain’s biggest banks, which has already brought out a range of such mortgages.

It is not just Muslim real estate that is whetting the appetite of British and Irish business. The financing of developments in the Middle East has fuelled the European market for deals that satisfy Islamic law. “It works both ways” said al-Kaddo. “The more partnerships and solutions we create, the more we can contribute to Irish society and business.”

In Britain, many leading banking and real estate practices have a team of specialists who have enough working knowledge of sharia to negotiate effectively with Muslims and arrange deals that satisfy Islamic clerical experts.