Bahrain's parliament withdraws bill that bans banks from charging interest

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Bahrain - Parliament has officially withdrawn legislation that would have banned all banks from charging interest and forced them all to adopt practices compliant with Islamic Sharia.

It has been shelved for a month following a backlash that greeted its announcement on Friday.

However, parliament financial and economic affairs committee chairman Abdulrahman Buali told the GDN exclusively that the plan was to bury it until parliament’s four-year term ends on May 15.

“It will be something the new parliament elected later this year will have to deal with, not us,” said Mr Buali.

“I don’t think that there would too much sensitivity if it is rejected, but now – with many issues pending and only around three months until the end of our term – I believe it wouldn’t be wise to reject it outright.

“That is because those behind it could react by delaying other vital legislation.”

Bahrain’s government has warned MPs against passing the law, saying it would jeopardise the country’s banking sector.

Mr Buali’s committee has already backed the draft law in principle, but it has not yet been debated in parliament.

It would give existing banks three years to adapt to the new requirements if enacted, while banning licences for new conventional banks.

Parliament first vice-chairman Ali Al Aradi told the GDN that, if passed, the law could have “crashed” the national economy.

“If MPs insisted on the law, I would have confronted them about their bank accounts and asked at which banks they receive their wages now, as MPs or previously in their former jobs or existing businesses,” he said.

“Hopefully, this legislation has been laid to rest because the disasters it would have caused might have crashed the whole economy.”