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Islamic Finance in Australia: Evolution, Structures, and Key Players
Understanding the Growth of Sharia Compliant Halal Finance in Australia
Islamic finance in Australia has grown from a niche offering to a robust ecosystem shaped by local innovation and global collaboration. The sector has adapted halal finance structures such as Murabaha Finance and Ijarah Finance to provide halal home loans and Tawarruq Finance for corporate finance meeting both Sharia compliant requirements and Australian regulatory standards. Institutions like MCCA, Crestmount, and Columbus Capital have driven this evolution, while academic voices like Dr. Imran Lum have helped bridge the gap between theory and practice.
What Were the Early Foundations of Islamic Finance in Australia?
Iskan Finance introduced Murabaha based home loans in 2001.
Iskan Finance, launched in 2001, pioneered Australia’s first Sharia compliant halal home loans using the Murabaha finance (cost plus profit) structure. The financier would purchase the home and sell it to the client at a marked up price, paid in instalments. This allowed ownership to transfer immediately while avoiding riba (interest).
However, Murabaha structures faced key challenges:
- Double stamp duty in some states (e.g. NSW), making the product costlier.
- Regulatory resistance due to the “substance over form” nature, which appeared similar to conventional loans.
Despite these hurdles, Iskan laid a critical foundation for future models of halal home loans in Australia.
How Did the Islamic Finance in Australia Evolve Towards Ijarah Finance?
MCCA, First Mac and Columbus Capital transitioned to a rent to own model.
MCCA (Muslim Community Cooperative Australia), established in 1989, shifted from co-operative style lending to Ijarah Muntahiya Bil Tamleek (rent to own) to enhance compliance and scalability.
Under this model:
- The financier buys the property and rents it to the buyer.
- Ownership transfers at the end of the rental term.
- The structure avoids interest by charging rent, not loan repayments.
To strengthen their offerings, MCCA partnered with First Mac whom along with another non-bank lender, Columbus Capital, provided wholesale Islamic funding certified by Amanie Advisors (Malaysia). This allowed the Islamic finance sector to link into securitised mortgage markets, offering competitive pricing and scale to halal home loans.
By 2025, MCCA had financed over $1 billion in halal home loans, making it the country’s largest Islamic finance provider.
What Role Did Major Banks Play in Islamic Finance in Australia?
NAB Bank and ANZ Bank developed commercial Sharia compliant offerings.
National Australia Bank (NAB) launched Australia’s first Islamic commercial finance facility in 2014, targeting business clients. NAB used the Mudarabah (profit sharing) model for syndicated loans, aligning with Basel III capital rules.
ANZ Bank leveraged its Malaysian subsidiary, AmBank, to structure Sukuk (Islamic bonds) and offer Islamic trade finance. Projects included large infrastructure ventures using Ijarah and Musharakah (joint venture) structures.
These initiatives signalled the growing interest from institutional banks in tapping the halal finance market in Australia.
How Was Tawarruq Finance Used in Cross Border Islamic Finance?
Piety Funds Management and TH Properties led an Malaysia-Australia partnership.
Piety Funds Management (today known as Crestmount Funds Management), in partnership with TH Properties (a subsidiary of Lembaga Tabung Haji, Malaysia’s pilgrimage fund), introduced Tawarruq based halal finance to Australia.
Key features:
- Funds were raised via commodity murabaha, often using palm oil as the trade medium.
- Maybank and RHB Bank Malaysia acted as halal finance intermediaries.
- Investments targeted halal residential developments in Australia.
Through this method, Piety raised over AUD 500 million, attracting Southeast Asian investors to halal certified real estate investment opportunities.
What Academic and Regulatory Contributions Have Shaped the Islamic Finance Sector in Australia?
Dr. Imran Lum bridged Islamic finance scholarship and regulation.
Dr. Imran Lum of Macquarie University has been pivotal in shaping Islamic finance policy and public understanding.
His contributions include:
- Advocating for stamp duty reforms, citing Victoria’s exemption on Islamic contracts under $1 million as a model.
- Advising ASIC on reconciling Sharia compliant finance with the Corporations Act.
- Leading industry dialogue on tax neutrality and risk based capital standards.
What Is the Current State of Islamic Finance in Australia?
Halal finance in Australia now spans retail, commercial, and cross border sectors.
Product Landscape:
- Retail: Primarily Ijarah home loans by MCCA, Crestmount, and Hejaz Financial Services.
- Commercial: Includes Sukuk, Tawarruq, and Mudarabah agribusiness investment.
Regulatory Challenges:
- Only Victoria offers full or partial stamp duty exemptions for Islamic contracts.
- APRA’s Basel IV rules require Islamic lenders to maintain capital buffers, limiting models like Mudarabah and Musharakah.
International Integration:
- Malaysian institutions such as CIMB and Maybank actively fund halal certified projects in Australia.
- Gulf investors increasingly view Australia’s agribusiness sector as a Sharia compliant growth opportunity.
Summary: Key Milestones in Islamic Finance in Australia
Summary: Key Milestones in Islamic Finance in Australia
- 2001: Iskan Finance introduces Murabaha home loans.
- 2008–present: MCCA and Columbus Capital scale Ijarah finance.
- 2014: NAB and ANZ launch commercial Islamic finance products.
- 2017–2022: Piety and TH Properties raise AUD 500M via Tawarruq.
- Ongoing: Dr. Imran Lum drives academic and policy influence.
Partner with Australia’s Leading Islamic Finance Specialists
At Crestmount Money, we are proud to be part of Australia’s growing Islamic finance sector. Whether you’re a first time homebuyer seeking Ijarah finance, an investor exploring halal investment funds, or a developer in need of Sharia compliant project finance, our team brings deep experience and global credentials to your journey.