Entries in English and Malay (Bahasa Melayu)

Friday, 17 January 2014

Moroccan government receives new Islamic banking draft bill

Casablanca, Asharq Al-Awsat—A draft Islamic banking law was presented to Morocco’s government on Thursday, in a bid to widen the Islamic financial products and institutions available in the North African Kingdom.
The draft bill, which if ratified will be added as a chapter to Morocco’s existing banking law, could pave the way for the country to issue its first sovereign Islamic bond.
Morocco had been hoping to issue an Islamic bond in 2013 and to develop an Islamic finance industry after the bill was first put to parliament in April 2012. Those plans were subsequently put on hold due to disputes over other issues in the government that eventually led to a cabinet reshuffle in October.
With the government burdened with liquidity problems and a slow economy, the move aims to attract money from Gulf countries, which along with Malaysia account for the lion’s share of the global 1.4–1.7 trillion US dollar Islamic finance market.
Morocco’s economy has been hit by the effects of the Arab uprisings and adverse weather conditions that have blighted the country’s all-important agriculture sector.
Fully fledged Islamic institutions or products cannot currently operate in Morocco, but it began allowing conventional banks to offer a limited set of Islamic financial services products in 2010.
However, such products have thus far failed to penetrate the domestic market, with a mere one percent of adults in the country using an Islamic financial product according to a Gallup poll. Many customers have complained that these products charge higher fees than their conventional counterparts.
Under the bill, Islamic banks will now be called ‘Participatory Banks,’ an alternative moniker commonly used to designate Islamic banking activity, and which stresses the desire on the part of Shari’a-compliant investors to earn money on their capital—or “participate” in the profits of an institution or company—without earning money on riba, or interest.
Among the banking products that could be offered by these institutions, the bill specifically pointed out profit-sharing, leasing, partnership and speculation. Descriptions of these products to customers will be specified by the central bank governor following consultations with the country’s Credit Institutions Committee and after receiving agreement from the Supreme Council for Islamic Sciences, the highest Islamic authority in the land.
The draft law does not limit Islamic finance activities to Islamic banks. Any credit institution or product, including small loan providers and savings and deposits funds, will be able to practice Islamic finance operations provided they acquire prior permission from the central bank governor.
The new law also includes amendments which will place the decision-making process on the conformity of Islamic banking activities with Islamic Shari’a law in the North African kingdom squarely with the Supreme Council for Islamic Sciences.
That task was previously assigned to a specialized Shari’a body which was overseen jointly but the Supreme Council for Islamic Sciences and the country’s central bank, the Bank Al-Maghreb.
Islamic bonds form an alternative to finance development projects through credit, and represent joint ownership shares in an investment project with rewards linked to the performance, eschewing the need to earn money on interest.
(Asharq Al-Awsat / 16 Jan 2014)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Saudi Arabia: Plug loopholes in zakat law - Shoura member

RIYADH — A member of the Shoura Council has called for collecting zakat from rich individuals and denounced fears that such a move may encourage them to park their money in overseas bank accounts, Al-Watan daily reported.

Khedhr Al-Qurashi stressed that the zakat law should also review defaulting land schemes from the Shariah’s point of vie, and whether such schemes should be covered in the calculation. 

He described the trade of land schemes as a "parasite" that does not contribute to the country's economy and also stressed that the law should consider the huge amounts of money individuals have in banks.

Another council member asked that the law should define the size of land that are subject to zakat, while another member cautioned of loop holes in the law. Other members pointed out that the law is unclear as far as commercial residential buildings are concerned and questioned whether zakat should be paid on the value of the property or the income derived from it.

(Saudi Gazette / 17 Jan 2014)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Moroccan government adopts Islamic finance law, seeks vote in parliament

Morocco’s government on Thursday adopted a bill regulating Islamic banks and sukuk issues after months of delays, paving the way for a final vote by the parliament of the North African kingdom later this year.
Approval of the law will be the last step before establishing full-fledged Islamic banks in Morocco, be they subsidiaries of Moroccan banks or foreign rivals, a measure which may bring more Gulf Arab investment into the country.
Morocco has been seeking to develop Islamic finance for about two years, partly as a way to attract Gulf money and fund a huge budget deficit. But the sensitivity of the Moroccan political elite to Islamism has repeatedly delayed its plans.
Last year, Moroccan deputies approved legislation allowing the government to issue sovereign sukuk, but it has not yet taken steps to raise its first Islamic bonds.
“We have adopted that law today and we are sending to the parliament,” communication minister and government spokesman Mustapha Khalfi told Reuters by telephone.
The minister said it was difficult to estimate how much time parliament would need, but experts expect it will vote before the end of this year.
Morocco’s central bank has started talks with a body of Islamic scholars on establishing a central sharia board to oversee the country’s fledgling Islamic finance industry, an official from Moroccan central bank told Reuters in April.
The board, composed of scholars and financial experts, would rule on whether instruments and activities complied with sharia principles.
Islamic banks will be called participative banks under the Moroccan legislation.
In 2010, Morocco began allowing conventional banks to offer a limited set of Islamic financial services, which obey principles such as a ban on the payment of interest.
The country’s Islamic finance drive accelerated after a moderate Islamist-led government took power through elections in late 2011, and as the Moroccan economy has been hit by the euro zone debt crisis.
(Al-Arabiya News / 16 Jan 2014)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Latest Posts

Upcoming Events on Islamic Finance, Wealth Management, Business, Management, Motivational

Alfalah Consulting's facebook


Alfalah Consulting is NOT providing any kind of loan to finance project etc and asking for a fee. If you've received any email claiming to be from Alfalah Consulting, offering loan to you, please ignore it or inform us for further actions. Our official email is If you've received an email from, that's NOT from us. Be cautious!