Nov 12 2010
|more articles from|
Islamic banking gains popularity in Algeria
For Algerian consumers seeking to avoid interest payments, sharia-compliant mortgages and other loans remain limited by an inadequate legal, institutional, and regulatory framework. An Islamic financing forum held Tuesday (November 9th) in Algiers examined how to satisfy these clients.
"The law on money and credit permits Islamic banking transactions and products, including mortgages, because these products don't constitute any breach of the Algerian law, and not because these financial institutions are compliant with the principles of Sharia," said Zoubir Ben Terdeyet of Isla Invest Consulting, which helped organise the conference.
Ben Terdeyet confirmed that this financial concept is deemed an important alternative solution, as it includes measures that can curb inflation and avoid financial crises that lead to bankruptcy.
''The share of the Algerian banking market doesn't exceed 1% of the total assets circulated around the world," Haider said, adding that measures included in the Islamic banking system would put an end to the tax problems with investments and riba-based practices that cause financial crises.
"In Algeria, 99% of the real estate loans that are granted by banks are based on interest rates," said Abdelkader Beltas, general manager of the Mortgage Refinancing Company. "Although this formula is prohibited in Islam, people continue to borrow money to buy housing units in the absence of alternative formulas."
There are four financial institutions operating as per Islamic financial principles in Algeria: al-Baraka Bank, Gulf Bank in Algeria, al-Salam Bank and Salama Insurance Company. However, the share of Islamic banks in the Algerian market is still marginal, not exceeding 1.5%. Public banks control the banking sector in Algeria, where the private banks only constitute 12%.
During the discussion of the Bank of Algeria governor's report last October, some lawmakers representing Islamic parties in the parliament raised the question of poor Islamic financing options.
One of these MPs, Mohammed Hadibi of the Ennahda Movement, criticised the pressures exerted on banks that operate according to sharia rules in Algeria, compared to the complete freedom given to European banks that operate in country. He also called for implementing the Bank of Algeria governor's obligation by opening Islamic windows at public banks.
The government responded to these demands by amending the Law on Money and Credit, after consulting experts in Islamic banking and specialists in the fighs of Islamic sharia. Passed in May 2010, the amendment will take effect next January. It aims to reconcile the current financial system in Algeria and get it closer to the rules of Islamic transactions, especially with regards to interest payments at traditional banks.
By Walid Ramzi
© Magharebia.com 2010
© Copyright Zawya. All Rights Reserved.
People Who Read This Also Read
- Google execs' planes saved millions in costs due to error- NASA
- CORRECTED-Two infant skeletons found in dead Ohio woman's home
- RPT-Gruesome gift that keeps on giving: $200 to sponsor museum skulls
- Two infant skeletons found in dead Ohio woman's home
- Gruesome gift that keeps on giving: $200 to sponsor museum skulls
- There's More