Morocco might soon create its first Islamic banks. The issue is indeed one of Benkirane government’s priorities: the Parliamentary group of PJD, the moderate Islamic party having won November’s elections, has already finished writing the draft bill to be presented at the Chamber of Deputies, drafted by a team of Party’s experts led by the General Affair and Governance Minister Mohamed Najiib Boulif. On the financial instruments’ market, the so-called “Islamic” instruments were already partially available, but the institutes managing them had never expressed their interest in the creation of specialized banks. However, PJD’s victory changed many things, since the model has proved to resist the crisis and showed a large potential for growth. The draft bill begins with classification of the general principles underlying products currently traded by banks, grouping them into halal (allowed) and haram (forbidden) by Sharia and specifies that lending must not be the source of profit. Imposing interests is therefore prohibited and lending is not considered a form of trading anymore: “Funding agreement with banks imply participation of the bank itself in both profits and losses”. Actually, Islamic banks do not merely propose financial brokering services as in traditional banking regimes; they play an active role in wealth generation, transformation and trade processes. The draft bill proceeds to determine which financing models are allowed. In general, they are “contracts compliant to Sharia regarding the use of funds aimed at generating profits”.
The institutes allowed to work within this system are grouped in three categories: Islamic banks, financial institutions similar to Islamic banks and Islamic financial institutions.
Today, any moral entity allowed to collect funds, manage and invest them according to the Islamic law might be labelled as Islamic bank. These institutes would be subject to Sharija, not to current laws regulating the credit institutions and similar bodies, except the provisions that are already compliant with the Sharia. This would not prevent Islamic financial institutes from entering today’s bank system: they would act under protection of Bank Al-Maghrib, the Moroccan Central Bank and by the National Council of Money and Savings, according to provisions of the Central bank, both as far as monitoring and prudential principles are concerned. The PJD project would also allow traditional banks to convert into Islamic banks, either totally or partially, creating branch offices, local cash desks or investment funds specialized in this kind of activity.
According to La Vie Eco, the total amount of funds currently circulating in the world’s Islamic finance is estimated at more than USD 1000 bln in 2011, that is, a growth by 50% over 2008 and by 21% over 2010. About one fourth of the world’s population is Muslim, so the system has significant potential for growth; experts estimate that Islamic finance might absorb between 40 and 50% of savings in this group.