Johannesburg — In its endeavours to expand its reach in the asset financing sector, WesBank has teamed up with the Muslim group PureCapital to create an Islamic vehicle- financing product that will meet all the requirements of the sharia, or Islamic law.

In terms of the law, Muslims are not permitted to enter into agreements that involve interest charges, nor are they able to take out insurance cover. They have had to pay cash for goods.

After two-and-a-half years of discussions with members of the Muslim community and scholars locally and abroad, WesBank will introduce Islamic Finance - a first for South Africa.

The new scheme involves a plan in which the price of a vehicle, present and future interest rates and insurance, will be factored into a monthly repayment. It is in effect a rental plan in which the customer owns the vehicle at the end of the repayment period.

Chris de Kock, general manager of WesBank marketing, says the product meets the demands of Islamic law as well as those of the South Africa judicial system. It will create a demand from the Muslim community and others that want to move away from interest-based banking.

There are about 1.2-million Muslims in South Africa, of whom about 400 000 are economically active. It is expected that the new product will earn at least R20-million a month in new business.