Best Islamic Banking In Canada: 8 Best Banks

In a world where financial choices intermingle with ethical and religious convictions, many Islamic Canadians prefer to work with an Islamic Bank or financial service that respects their culture and beliefs.

If you’re looking for the best Islamic banking in Canada, then you’ve come to the right place.

Below, I’ll do my best to explain the basics of Islamic banking and how some practices differ from traditional Canadian banks. Then, I’ll give you a comprehensive review of some of the best Islamic banks and financial services in Canada.

What Makes Islamic Banking Different?

Islamic banking operates in accordance with the principles of Islamic law (Sharia) and is guided by Islamic economics. It’s not just a financial system – it’s a value-driven approach to banking and overall financial management.

Unlike conventional banking, Islamic banking emphasizes risk sharing, prohibits interest (Riba), and invests only in Sharia-compliant businesses, avoiding industries like alcohol or gambling. This system appeals to those seeking ethical investments and who are looking for an equitable approach to financial services.

Principles of Islamic Banking and Riba

Islamic banking is rooted in several core principals, including:

  • Prohibition of Interest (Riba): Islamic banking avoids interest on loans or deposits, instead focusing on profit sharing and risk distribution.
  • Ethical Investments: Funds are only invested in socially responsible and halal (permissible) ventures, steering clear of businesses involved in gambling, alcohol, or other prohibited activities.
  • Asset-Backed Financing: Transactions are typically asset-backed or asset-based, ensuring that they have tangible economic activity and value.
  • Risk Sharing: Rather than transferring the risk to one party, Islamic banking promotes risk sharing between the lender and borrower.
  • No Speculative Activities: Gharar (uncertainty) and Maysir (gambling) are avoided to ensure that all transactions are clear and based on real economic activity.

These principles work together to create a banking system that aligns with Islamic moral and ethical values.

Of these, the prohibition of interest (Riba) is among the most important issues.

The concept of Riba, or prohibition of interest, is fundamental in Islamic finance. It refers to the forbiddance of charging or paying interest on loans or deposits. In Islamic banking, financial transactions must not involve Riba, as it’s considered exploitative and unfair.

Instead, banks operate on profit-sharing models, where the bank and its customers share the risks and rewards of investment equally. This approach is seen as more ethical and aligns with the principles of equitable distribution, fairness, and social welfare.

Best Islamic Banking and Financial Services In Canada

Whether you’re looking for a full-fledged Islamic bank or a conventional bank that offers Sharia-compliant products, the following financial institutions and services are worth looking into.

1. Habib Canadian Bank

Habib Canadian Bank embraces the values of Islamic banking and offers a range of Sharia-compliant financial services tailored to meet the needs of its Islamic clients.

The bank’s portfolio includes profit-sharing investment accounts, which operate under the Mudarabah principle, allowing customers to invest their funds while adhering to Islamic laws.

The bank also provides Murabaha financing for personal and business needs, ensuring transactions are transparent and interest-free.

Habib Canadian Bank is committed to ethical Islamic banking and merges traditional Islamic principles with modern financial needs to offer a unique banking experience to help its customers conform to Islamic finance laws.

2. Qurtuba Housing Co-op

  • Learn more: qurtuba.ca
  • Specializes in: Housing solutions for Muslims

Quebec-based Qurtuba Housing Co-Op is a not-for-profit financial services company that was founded in 1990 to help Canadian Muslims find housing solutions that fit their beliefs.

The housing co-op distinguishes itself with a strong commitment to providing housing solutions that adhere to Islamic financing principles.

It specializes in offering cooperative housing services guided by Islamic Sharia law, particularly the principles of partnership and shared equity. This approach allows members to invest in property without the burden of interest, aligning with ethical and religious values.

The institution currently has a community of over 4,000 members and has helped over 900 of them buy a home.

3. Manzil

  • Learn more: manzil.ca
  • Specializes in: Islamic investing and estate planning

Manzil is particularly known for its commitment to making Islamic financial services accessible and understandable, bridging the gap between traditional Islamic values and modern financial needs.

Featured by popular sources such as CTV News and The Globe and Mail, Manzil Bank aims to be a hub for all of your Islamic Banking needs, including housing solutions, investing, and more.

One thing that really sets Manzil apart from other Islamic banks is that it offers Islamic wills and estate planning to ensure the proper and ethical transfer of assets after one’s passing. Additionally, the bank connects its customers to non-haram cash back Mastercards that align with Riba law.

The bank operates on strict pillars of conduct and follows a six-step process to help its customers find the best halal financial solution:

  • Step 1: Finding the right financial product for your needs
  • Step 2: A prayer of guidance (two Rak’as Salah t-ul Istikharah)
  • Step 3: Formulate the solution and consult our Shariah Supervisory Board to ensure compliance with Sharia Laws
  • Step 4: Create legal agreements to ensure all Shariah boundaries are followed
  • Step 5: Submit the final documents to the Shariah Supervisory Board for approval
  • Step 6: Say Bismillah

What really stands apart about this financial institution is how committed it is to following proper procedure to ensure that every party leaves in good conscience.

4. Aya Financial

  • Learn more: ayafinancial.com
  • Specializes in: Halal bank accounts and mortgages

Aya Financial is committed to offering a wide range of Sharia-compliant financial services, including Halal mortgages and business financing. It caters to clients seeking ethical solutions aligned with Islamic principles, offering personalized service that combines adherence to faith with financial expertise.

The bank’s website also has a helpful page full of financial management calculators to help its customers better understand financing and repayment terms when it comes to housing solutions.

5. Ansar Cooperative Housing Corporation

  • Learn more: ansarhousing.com
  • Specializes in: Halal mortgages and Islamic housing solutions

Ansar Cooperative Housing Corporation provides a unique avenue for Canadian Muslims to own homes while adhering to Islamic financing principles.

Its model is built around cooperative, interest-free financing, promoting homeownership through mutual support and shared equity. It also offers home and auto insurance solutions through its partner Takaful Insurance, so you can ensure that your insurer is also halal.

Another interesting service offered by Ansar is the opportunity to invest in your retirement with the Al-Amin interest-free RRSP (Registered Retirement Savings Plan).

The cooperative celebrated its 42nd anniversary in 2023 and has been in business since 1981, making it one of Canada’s oldest Islamic financial institutions.

Ansar is focused on community development and economic empowerment and aims to enable both Muslim individuals and families to invest in their futures without compromising their values.

6. Assiniboine Credit Union

  • Learn more: acu.ca
  • Specializes in: GICs and mortgages

Assiniboine Credit Union, though not exclusively an Islamic bank, is recognized for its inclusive approach to banking and offers services that cater to diverse communities, including Islamic customers. Some of its core offerings include a five-year fixed GIC as well as five-year fixed and variable-rate mortgages.

It is known for its ethical banking practices and community-focused services, making it a viable option for those seeking financial products aligned with their values. Compared to some of the other Islamic banks in Canada, ACU has an outstanding online banking app that makes it very easy to use.

7. Ijara Community Development Corp

  • Learn more: ijaracdc.com
  • Specializes in: Islamic home loans

Ijara CDC claims that its, “sole objective is to provide proper finance options to all those consumers who hold fast to ethical or religious prohibitions regarding interest paid on loans.”

The financial organization offers a unique Islamic financing model to the Canadian market, centred around Sharia-compliant leasing (Ijara) structures for home financing. This method allows individuals to own homes without a conventional mortgage, adhering to Islamic principles against interest.

Its approach is designed to facilitate ease and clarity, ensuring that clients can navigate homeownership in a way that aligns with their faith.

8. United Muslim Financial

In 2004, United Muslim Financial secured a $120 million Shariah-compliant investment loan from a regulated Canadian financial institution to invest in residential properties so the bank could lend them out to Islamic patrons.

UMF upholds the principles of Islamic finance through several products, including Sharia-compliant mortgages and business financing solutions. It’s committed to ethical, interest-free transactions and offers Canadian Muslims a trusted resource for financial services.

The main downside is that it doesn’t appear to have a good online banking platform, which means that much of your banking must be done in person or over the phone.

What Is The Most Comprehensive Islamic Banking Solution In Canada?

Out of all of these financial institutions, I would say that Habib Islamic Bank appears to offer the widest range of services and solutions to Canadian Muslims.

That being said, I haven’t worked with these banks personally, and several of the ones I mentioned appear to offer excellent Sharia-compliant banking and finance solutions.

Looking for more ways to stay on top of your financial responsibility? Keep on reading to see the best retirement options in Canada!

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