Morocco to Create Sharia Board to Oversee Islamic Banking Sector

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Al-Akhbar Management

Published Wednesday, February 18, 2015

Morocco is to create a sharia board of Islamic scholars to oversee the country's fledgling Islamic finance industry, according to a royal decree.

It is the second big step to allow the creation of Islamic banks and enable private firms to issue Islamic debt, after parliament approved the Islamic finance bill last November.

Islamic banks, which ban interest payments and pure monetary trading, have been growing across Asia, Middle East and Europe.

Sensitive to Islamist political movements, Morocco has long rejected the idea. But the country's financial market lacks liquidity and foreign investors, and Islamic finance could attract both.

Called the Sharia Committee for Participative Finances, the board will be composed of 10 Islamic scholars plus at least five financial experts, the official bulletin said.

The members of the committee will be named by the president of the country's Islamic scholars council, the bulletin added.

The board will approve the conformity of the Islamic products proposed by the participative banks, as they will be known under the legislation, and insurance to Sharia.

It will also oversee the central bank decisions regarding the participative finances sector.

Major Moroccan banks have been preparing to open Islamic offshoots since the legislative process began. Foreign lenders have been also testing the waters.

Gulf banks from Kuwait, Bahrain and the United Arab Emirates have expressed interest in entering the market when the bill becomes law.

In a December report, the Financial Times predicted that Morocco was facing a growth phase, after economic struggles that lasted for over seven years. Creating Islamic banks and opening the space for private firms might contribute to that growth.

Morocco has avoided the turmoil that affected neighboring Arab countries, namely Algeria and Libya. However, some security concerns remain over Islamists cells, which Moroccan authorities have been targeting for the past year. Moreover, Morocco’s occupation of Western Sahara territories, and the ensuing dispute with Algeria, had cost the Kingdom over 10 percent of its total gross domestic product (GDP) every year, according to the latest estimates.

(Reuters, Al-Akhbar)

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