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WorldJuly 1 2014

Morocco inches towards Islamic finance

Morocco is on the cusp of a legislative breakthrough that will pave the way for a fully fledged Islamic finance system in the country. But with a history of failed Islamic banking experiments, on top of the usual problems associated with establishing a new market in a country, Morocco's Islamic banking sector is unlikely to take an instant hold.
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Morocco inches towards Islamic finance

Morocco’s parliament is currently discussing a bill to regulate Islamic finance in the country. The bill, which was first tabled in January 2014, is the final step before the introduction of a fully fledged Islamic banking industry in Morocco. If it is passed into law, Islamic banks will be permitted to operate in the country for the first time. Conventional banks will also be able to offer Islamic banking and asset finance products, including murabaha, a sharia-compliant type of credit sale, musharaka, a joint enterprise or partnership agreement used commonly in Islamic finance, and ijara, the provision of a service or product based on an Islamic rental or lease contract.

There will not be any formal restrictions on what type of institutions can apply for a licence to provide them. Meanwhile, Morocco’s central bank is negotiating with a group of Islamic scholars to launch a new central sharia board, which will regulate the industry to ensure the authenticity of Islamic products on the market. The progress follows the introduction of law number 119-12 in September 2013, which allows sovereign and corporate bodies to issue sukuk.

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