Halal Bank Loans To Finance Housing and Purchase New Vehicles Staring From September

date 2017/07/06 views 476 comments 0

icon-writer Imène Kimouche /*/ English Version: Med.B.

The Director General of the Local Development Bank (BDL), Mohamed Karim, revealed preparations for the launch of Islamic loans and related financial services, ie without interest or financial margins starting from the beginning of next September 2017, pointing out that the move was initially scheduled to be launched in July but the bank’s management met yesterday and decided to postpone the file, in view of the fact that the Algerians are very busy during the summer holiday season.

Thereby, the official launch of these banking services will coincide with the next social comeback in a bid to secure a wide response from customers, he noted.

The BDL Bank General Manager said in a statement to “Echorouk” that these “halal-oriented” banking services will be applied under three already-approved formulas, namely, leasing, speculation and financial margins, as he expects this endeavor to be widely accepted by large numbers of  Algerians, stressing that these loans will be directed towards investments and to finance projects related to housing and real estate as well as consumer loans as the latter  are the most sought after by citizens, as he put it.

Mr Karim added that he had already ordered the setting up within the BDL bank of a special business unit designed to thoroughly study the launching of transactions and loans through bank derivatives. 

The first called “Murabaha” is related to finance while the second loan pertains to savings. It is a book from which the bank obtains a margin of profit rather than interest rate.

Since 2015, banks in Algeria have been striving to recover funds outside the official market, ie, outside banks and post offices, by offering more flexible services. 

The reason for the reluctance of citizens to resort to banks is the forbidden accrued financial interest. The Islamic financial services are expected before the end of this year to support investment through all financial institutions.

 This comes within the framework of the projected recovery of black market funds previously estimated at 3,500 billion dinars and the revival of national investment, and the conversion of banks into alternative financing of outstanding projects instead of the Public Treasury, because of the latter’s decline in revenues, stemming from the persisting world oil crisis.

As a reminder, the Bank of Algeria launched a drive a few months ago to re-raise banks' capital so as to revive their financial flows and enable them to respond to the large demand for loans directed primarily to investors. The Bank's financing process was however frozen in 2001 due to the high liquidities possessed by banks at the time.

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