Wednesday, February 15, 2012

Morocco To Create Its First Islamic Banks

Islamic banking is defined as banking activity that is consistent with the principles of Islamic law or Sharia. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as riba) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also haram (forbidden). Around the world it is estimated that more than one hundred billion dollars are circulating in the world's Islamic banking systems. With Muslims making up more than one fourth of the world's population, this amount is expected to grow, with 2011 showing a fifty percent increase since 2008. Now Morocco is about to create its first Islamic banks.

The issue of Islamic banking is one of the new Benkirane government's priorities. News reports indicate that the PJD government has completed writing the draft bill to be presented at the Chamber of Deputies.

Stefano Oliviero, writing for the ANSAmed website, reports that the draft bill has been written by the General Affairs and Governance Minister Mohamed Najiib Boulif's team of experts. On the financial instruments' market, the so-called "Islamic" instruments were already partially available, but the institutes managing them had never expressed their interest in the creation of specialized banks. However, PJD's victory changed many things, since the model has proved to resist the crisis and showed a large potential for growth.

The draft bill begins with classification of the general principles underlying products currently traded by banks, grouping them into halal (allowed) and haram (forbidden) by Sharia and specifies that lending must not be the source of profit. Imposing interests is therefore prohibited and lending is not considered a form of trading anymore: "Funding agreement with banks imply participation of the bank itself in both profits and losses".

Islamic banks do not merely propose financial brokering services as in traditional banking regimes; they play an active role in wealth generation, transformation and trade processes. The draft bill proceeds to determine which financing models are allowed. In general, they are "contracts compliant to Sharia regarding the use of funds aimed at generating profits".

The institutes allowed to work within this system are grouped in three categories: Islamic banks, financial institutions similar to Islamic banks and Islamic financial institutions.

Today, any moral entity allowed to collect funds, manage and invest them according to the Islamic law might be labelled as Islamic bank. These institutes would be subject to Sharia, not to current laws regulating the credit institutions and similar bodies, except the provisions that are already compliant with the Sharia. This would not prevent Islamic financial institutes from entering today's bank system: they would act under protection of Bank Al-Maghrib, the Moroccan Central Bank and by the National Council of Money and Savings, according to provisions of the Central bank, both as far as monitoring and prudential principles are concerned. The PJD project would also allow traditional banks to convert into Islamic banks, either totally or partially, creating branch offices, local cash desks or investment funds specialized in this kind of activity.



Anonymous said...

Did it ever cross the minds of Islamic scholars that there is one thing called "inflation"?
Did it ever occur to them that whatever financial system that prevailed in the 7th century would not be applicable to the 21st century?
Do they even understand what a financial system really is?
I doubt that these scholars have the slightest idea, beyond the fact that money buys stuff, what really is at stakes in a modern financial system.
If the Islamic world does not align itself with the rest of humanity, they will pay dearly for this nonsense.
Religion should be restricted to spiritual matters, and should never interfere with politics, finances or any other worldly matters.

Anonymous said...

To "Anonymous n°1" from "Anonymous n°2"

Educate yourself because you know nothing about Islamic finance.

If you believe inflation is a natural phenomenon you are wrong. Inflation is the wicked result of the paper money monetary system. In a gold and silver monetary system there is no inflation. 1400 years ago a gold dinar would buy a calf and a silver dirham would buy a chicken. Today, the same quantity of gold would still buy a calf and the same quantity of silver would still buy a chicken. Zero inflation in 1400 years.

The so called modern financial system is an economic disaster and a crime against humanity. Years ago Zimbabwe borrowed a few billion dollars from the World Bank and had to pay back fifty times these amound in compound interest. The modern monetary system is a black hole that starves the majority of world's population to enrich the banksters.

To enlighten you I invite you to discover the conferences of Sheikh Imran Hosein about "Riba", gold, the monetary system etc. They are available on Youtube.

Anonymous said...

So if you think there is no inflation, then what you say about this:
روى ابو داود وغيره بسند هم عن عمر و بن شعيب عن ابيه عن جده قال (( کانت قيمة الدية علي عهد رسول الله ثمانمائة دينار، ثمانية آلاف درهم، ... فکان ذلک کذلک حتي استخلف عمر فقام خطيبا فقال: إن الابل قد غلت. ففرضها عمر علي أهل الذهب ألف دينار
it is reported that the diyah at the time of the prophet was valued as 800 dinar or 8000 dirham, but at the time of umer he valued diyah at 1000 dinar or 12000 dirham, because the price of camels has gone up.