Last updated 14 November 2026 · Reviewed by Riyadh Financial Services Compliance
At a glance
- In Australia, a bank is an authorised deposit-taking institution (ADI), licensed by APRA.
- You don't need a bank for Islamic home finance: what makes it Islamic is the contract's structure.
- We don't take deposits.
- Credit law and free AFCA complaints apply whether or not the financier is a bank.
What is a bank in Australia?
Legally, a bank is an authorised deposit-taking institution, or ADI. APRA (the Australian Prudential Regulation Authority) grants ADI licences under the Banking Act, and the category also covers building societies and credit unions.
Banking business means accepting deposits and lending money together. A business that provides finance but takes no deposits generally doesn't need an ADI licence. A financial business that isn't an ADI also needs APRA's consent before calling itself a bank, and APRA intends that to be rare.
Is there an Islamic bank in Australia?
No. As at November 2026, there is no Islamic bank in Australia. APRA applies the same minimum licensing criteria to every applicant, so a bank run on Islamic principles needs the same ADI licence as any other bank before it can accept deposits. To check any business, search APRA's list of registered ADIs. If it isn't listed, it isn't a bank, whatever its name says.
What is a non-bank finance provider?
A non-bank finance provider offers finance without taking deposits, so it has no ADI licence. ASIC still oversees them: anyone providing credit to individuals for a home or other household purposes needs an Australian Credit Licence, unless authorised by a licence holder or exempt.
Some Islamic finance providers supply the finance themselves. Others, like Riyadh Financial Services, arrange finance that a financier provides.
| Who | Takes deposits? | Provides the finance? | Licensing |
|---|---|---|---|
| Bank (ADI) | Yes | Yes | ADI licence, plus a credit licence |
| Non-bank financier | No | Yes | Credit licence, or authorised |
| Riyadh Financial Services | No | No: we arrange it | Authorised Credit Representative |
| Mortgage broker | No | No: helps you apply | Credit licence, or authorised |
How does Islamic home finance work without a bank?
Whether finance is Shariah-compliant depends on the contract, not on a banking licence. Our Ijaar home finance uses Ijarah Muntahia Bittamleek, a lease that ends in ownership.
- The financier appoints you as its agent (wakeel, under a Wakalah agency agreement) to buy the property on its behalf.
- You're the registered owner on the title from settlement. The financier holds a registered mortgage and a beneficial interest (an ownership share).
- You pay rental for the use of the financier's share. With Principal and Rental, you also reduce the amount financed.
- When all payments are made, the financier's ownership share passes to you, so you own the property outright.
That's usually what people want when they search for an "Islamic home loan" or "halal mortgage": Ijarah home finance, a lease that ends in ownership, with no interest.
Al-Mustaqbal SMSF finance, for self-managed super funds buying commercial property, uses Diminishing Musharakah: a partnership that reduces over time as the fund buys out the financier's share. The fund pays a dividend rate, not interest. Neither Riyadh Financial Services nor brokers give SMSF advice. Speak to a licensed financial planner or an accountant licensed to give SMSF advice.
In both, the return comes from rent on a real asset or a partnership, not from lending money for money, so there's no riba (interest).
Do the same consumer protections apply?
Yes. Finance for a home or a residential investment is regulated under the National Consumer Credit Protection Act, whatever the Shariah structure and whoever the financier is. That includes hardship help and free external complaints through AFCA, the Australian Financial Complaints Authority.
Riyadh Financial Services is an Authorised Credit Representative of Kuone Pty Ltd, which holds an Australian Credit Licence, and we're an AFCA member. See Is Riyadh Financial Services licensed? to check us.
No government body certifies Shariah compliance. Our product structures are reviewed by our independent Shariah adviser, and you can ask us for our Shariah certificate and what it covers.
What should you ask any provider?
- Are you a bank, or do you arrange finance a financier provides?
- Which credit licence do you operate under, and are you an AFCA member?
- How is it structured, and where does the financier's return come from?
- What does your Shariah certificate cover?
Our guide Is Islamic finance halal? explains these checks.
How can Riyadh Financial Services help?
Riyadh Financial Services arranges Shariah-compliant property finance through accredited mortgage brokers. Accredited brokers must act in your best interests under Australian credit law (the best interests duty), and they work across Australia, in person or online.
We explain how our structures work, but we don't give religious rulings, and you're always welcome to seek your own scholar's view.
Keep reading:How Islamic home finance works · Is Islamic finance halal? · Ijaar home finance