Bank of Maldives is now Islamic first: how Diminishing Musharakah home financing works

On 13 September 2026 Bank of Maldives (BML) moved its personal banking to what it calls "Islamic Finance First". From that day, every new personal account and every new personal financing application is processed under Islamic banking principles. Existing customers have simple ways to switch. Anyone who prefers conventional banking can still ask the bank for it directly.

BML introduced Islamic banking in 2015. Over the past year it turned its regional branches into Islamic banking service centres.

How Diminishing Musharakah works

BML's home purchase and home construction financing both use Diminishing Musharakah, a partnership:

1. You and the bank buy the home together. You put in your share (the equity, from 5%); the bank puts in the rest.
2. You live in it and pay rent on the bank's share, which BML calls the lease payment.
3. Each month you also buy back part of the bank's share. As its share shrinks, so does the rent.
4. When you have bought all of it, the home is entirely yours.

In practice the monthly payment works much like a repayment mortgage. The difference is in the contract: you pay rent on a share of a real asset and buy that share, rather than interest on money lent.

What it means for a buyer

• The headline rate is the lease rate: up to 9% a year in rufiyaa, 7.5% for USD earners.
• Paying early is a revaluation, not a penalty. Under BML's current schedule of charges, paying off more than MVR 1 million (or USD 100,000) earlier than 60 days before it is due costs 2% of the amount prepaid. The schedule lists no revaluation for smaller prepayments.
• Paying late raises the price of the bank's share. For the first 89 days overdue, the redemption price rises by 0.5% a month over the agreed rate; from day 90, by 5% a year over the agreed rate on everything outstanding.
• Your customer funds are kept separate from BML's conventional banking.

As published by Bank of Maldives on 18 October 2026. General information, not financial or religious advice.