HSBC will this week become the first bank to offer an Islam-friendly pension fund to cater to Britain’s two million Muslims.

The HSBC Life Amanah Pension Fund is compliant with Sharia, or Islamic law, which means that it does not hold shares in any companies that are unacceptable to Muslims.

Investment in breweries and distilleries, casinos, publishers of pornography, producers of pork products, tobacco and conventional financial services has been ruled out by the fund’s managers.

Any dividends that are generated by doctrinally unacceptable parts of a business will be “purified” according to Sharia by being donated to charity through the HSBC Community Foundation rather than being distributed to investors.

For example, if the fund invests in an advertising agency and part of the agency’s profits come from alcohol advertising, dividends generated by these profits will be given away.

Julian Lyne, the head of institutional pooled funds at HSBC Asset Management, said that the fund had been approved by an independent panel of Islamic scholars. Interest is not permitted to Muslims but property ventures are popular.

“With recent anti-discrimination legislation, trustees need to consider whether they are giving Muslim employees and members access to a Sharia-compliant pension fund,” Mr Lyne said.

Last July HSBC became the first bank to offer an Islam-friendly home finance scheme.

The products are available through the bank’s Amanah Finance division, which offers a number of Sharia-compliant services. The new fund, which will track an index of the top 100 companies involved in suitable activities, features global equity exposure.

But investors will be able to invest in the fund only through their employee pension scheme as it will not be available to direct customers.