APRA revokes Islamic Bank Australia's banking licence

The Australian Prudential and Regulation Authority (APRA) has announced that it has agreed to a request from Islamic Bank Australia Pty Ltd (Islamic Bank) to revoke its licence to operate as a restricted authorised deposit-taking institution (RADI).

Islamic Bank (operating as IBA Group Pty Ltd at the time) was first granted the RADI licence by APRA in July 2022 under the Banking Act 1959.

However, Islamic Bank had not launched any products since then and had no customers and zero deposits.

APRA confirmed that Islamic Bank’s decision to request a revocation of its RADI licence “does not prejudice any future application it may make for a restricted ADI or ADI licence”.

Islamic Bank (now operating under the new name Islamic Money) posted a statement on its website regarding the surrendered licence: “This decision comes because of challenges in raising the necessary capital to maintain our licence.

“We understand the anticipation and excitement surrounding the launch of the first Islamic bank in Australia. The journey thus far has been one of passion, dedication, and unwavering commitment to providing Islamic financial services to our community.

“However, the current capital market conditions have proven to be exceptionally challenging at this stage of our endeavour.

“We want to assure you that our resolve remains as strong as ever.

“Our team is diligently exploring various options to navigate this setback and determine the best path forward. We remain committed to our vision of delivering innovative Islamic financial solutions that meet the needs of our community.

“In the interim, we will be operating under the name Islamic Money.

“While we may have relinquished our banking licence, our dedication to serving you, our valued community, remains steadfast.”

Islamic Money became the first Australian bank for Islamic borrowers when it was first granted its RADI licence in 2022.

At the time of its launch, Islamic Bank was backed by 13 Muslim founders and owned by a UAE-based company Abreco (which operated in multiple industries such as banking, freight, transport, energy, oil & gas, and education).

The bank stated that its products would be endorsed by “internationally renowned Islamic scholars to ensure they are shariah-compliant”.

Islamic Money was set to first launch a retail/personal banking with an everyday bank account, savings product accounts that pay profit share) and home finance (with co-ownership), before moving into business banking once it received a full licence.

More to come

[RELATED: Australia’s 1st Islamic Bank will distribute through brokers]