2023-07-17 18:03:49
ALGIERS- Experts and officials of the banking sector highlighted, Monday in Algiers, the success of the Algerian experience in the field of Islamic finance, three years following the promulgation of its regulatory framework, noting that the monetary and banking law, promulgated recently, should contribute to the development of this activity, in particular through the opening of banks dedicated exclusively to Islamic finance.
During a conference on Islamic finance, organized by the High Islamic Council (HCI), in the presence of its president Bouabdallah Ghlamallah, the speakers welcomed the approach adopted by the public authorities by gradually moving from the Bank’s regulations and instructions of Algeria (BA) to the monetary and banking law, calling for the establishment of preventive rules for this alternative mode of financing at the level of banks.
In this context, the expert Abderrahmane Belhafsi indicated that three years following the promulgation of the regulatory framework governing the services of Islamic banks in Algeria, “we can qualify the Algerian experience as successful, with regard to the results achieved, in particular through the deployment bank branches, the number of which exceeded 500 branches”.
Highlighting the growing number of customers opting for Islamic finance products as well as the resources mobilized for this purpose, the same speaker stressed that the monetary and banking law is able to strengthen the banking sect through the creation of banks and financial institutions specializing exclusively in Islamic finance.
The monetary and banking law includes a series of provisions including the strengthening of the governance and prerogatives of the Bank of Algeria, the Money and Credit Council (CMC), and banks and financial institutions as well as the establishment a regulatory framework related to the exercise of the activity relating to Islamic finance.
The law, recently published in the Official Journal (JO), allows the BA to introduce the Central Bank’s digital currency, called “Algerian digital dinar”, which is developed, put into circulation, managed and controlled by the Central Bank . The text also provides for the creation of digital banks and bodies called “Payment Service Providers (PSP)”, and enshrines and regulates the dematerialization of exchanges with banks, financial institutions and payment service providers.
Calling for the creation of a financial market allowing the exchange of Islamic securities and the establishment of specific preventive rules for Islamic banks, Mr. Belhafsi highlighted the importance of developing a solid plan of action establishing with precision the practical measures capable of facilitating the work of establishments active in the field of Islamic finance, including banks, financial companies and counters.
Advanced preparations for the launch of Islamic Sukuk
For his part, Mr. Mohamed Boudjellal, member of the HCI and expert in Islamic finance, indicated that the draft regulatory framework relating to the launch of Islamic Sukuk, a financing tool for institutions and the economy, is at a stage ” very advanced.”
He explained, in a statement to APS, that the project first required an amendment to the Commercial Code in force, then the drafting of executive decrees concerning the framework and organization of this alternative financing formula, in accordance to the principles of the Islamic Sharia, adding that the HCI had formulated its proposals on this subject.
For his part, Saïd Bouizri, a member of the Sharia National Fatwa Authority for the Islamic Financial Industry under the HCI, affirmed that Algeria had adopted several legal and regulatory texts aimed at “strengthening, promoting and supporting the activity of Islamic finance”.
Recalling the exemptions provided for by the finance laws of recent years for the benefit of the activity of Islamic finance, Mr. Bouizri called, at the same time, to overcome the shortcomings noted, mainly related to the regulatory aspect, to understanding terminology, and coaching and training staff.
The same expert noted that the laws governing this activity “need enrichment”.
For his part, Abdelhamid Boulouadnine, Managing Director at the BA, said that Islamic finance was called upon to develop further in Algeria, assuring that the BA was currently working on the development of its ecosystem.
This is, he said, the preparation of regulations and instructions to be completed “before the end of 2023” and allowing the establishment of a money market allowing banks activating in Islamic finance with excess liquidity, to lend to other banks that lack it.
In the same context, the BA is working to prepare other regulations relating to Sharaic governance, internal control at the level of banks, legal audit and the accounting system and supervision of the activity of Islamic finance, according to the speaker.
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