Morocco’s central bank said it would start issuing approvals for Islamic banks this year, with the aim of allowing them to begin business in early 2017.
Islamic banks and insurers are setting up in Morocco after it adopted legislation allowing them into the domestic market, and the central bank has set up a central sharia board with the country’s body of Islamic scholars to oversee the new industry.
The North African country had long rejected Islamic banking due to concerns about Islamist movements, but its financial market lacks liquidity and foreign investors, both of which Islamic finance could attract.
“It is absolutely wrong that some banks had been pushing to delay the process. To launch this industry, and to launch it in the correct way, needs a lot of work. That is all,” Lhassane Benhalima, the central bank’s head of banking supervision, told reporters after media had begun speculating on the reasons for the delay.
The central bank said it had received seven requests to open Islamic banks and three to open windows selling Islamic finance products. Two Gulf banks want to establish fully owned subsidiaries while four others are partnering with local banks, an official said.
Benhalima said Moroccan bank CIH is partnering with Qatar International Islamic Bank and Morocco’s CDG to create an Islamic banking subsidiary.
Morocco’s BCP has chosen Guidance Financial Group, BMCE Bank has picked Bahrain-based Al Baraka Banking Group, and Attijariwafa Bank will build its own business without a foreign partner, Benhalima said.
Dubai’s largest bank, Emirates NDB, and Qatar’s second-largest lender, Masraf Al Rayan, have asked to open Islamic banking subsidiaries in Morocco, the official added.
Subsidiaries of French banks Societe Generale. Credit du Maroc and BMCI have asked only for permission to sell Islamic financial products.
Islamic finance has been growing rapidly over the past decade as it broadens its investor base across the Middle East, North Africa and southeast Asia.
It is based on religious principles which avoid interest and pure monetary speculation.
The Moroccan central bank said it has adopted and sent circulars out regarding Islamic financial murabaha, musharaka, ijara and salam products to the sharia board for approval.
The bank is still waiting for parliament to approve a draft bill regulating Islamic insurance, or takaful, before operations begin as it aims to launch the Islamic finance industry as a whole.
Benhalima said the bank is planning an Islamic interbank market and was encouraging the government to issue regular sukuk (Islamic bonds) to ensure liquidity and financing tools for the industry.
“We expect the treasury to issue the first sukuk (ever) in the domestic market in the coming months.”-Reuters