Specialized Banks And Islamic Sovereign “Sukuk” For The First Time

The two new versions of the commercial law and the loan and cash law are expected to be released before the end of the year, as it will include new reforms related to regulating the Islamic financial industry in Algeria, as the first law releases the licensing of Islamic sukuk for the first time, and the second to open specialized Islamic banks instead of windows and agencies.

A member of the National Sharia Board for Issuing Fatwas for the Islamic Financial Industry at the level of the Supreme Islamic Council, Professor Mohamed Boudjelal, said in a statement to “Echorouk” that the council raised its proposals regarding the launch of Islamic sukuk, which will be the last building block in completing the building of the financial industry in Algeria, while the launch of the latter assumes the amendment to the commercial law, which is currently on the table of the Minister of Justice, Keeper of the Seals.

Boudjelal stressed that they have received assurances from the Minister of Justice that the file is being studied today and will be released soon, as the process will not take much time, to officially launch Islamic instruments in Algeria, which will liberalize the financial market and enable it to legally engage in legal transactions.

There are insurance companies active in Algeria that launched “Takaful” insurance, as two companies are currently active in this field.

It is also expected to launch two other public companies specializing in takaful insurance before the end of the year, and it is related to “Takaful Algeria” for property insurance according to Shariah-compliant formulas, and also to the “United Insurance Company”, which will specialize in insuring people.

The law requires dealers in “Takaful” insurance companies to store 50 percent of the company’s allocations in the form of “permissions”, and since the process is not legally acceptable due to profits, the release of Islamic “sukuk” in Algeria, through the new commercial law, this will be followed by the issuance of the public treasury’s Shariah-compliant sovereign “sukuk”.

The Supreme Islamic Council is also awaiting amendments to the Loan and Monetary Law, which will include, for the first time, a license to open specialized Islamic banks.
The Loan and Monetary Law will allow the opening of specialized Islamic banks, similar to the specialized insurance companies, so that the Islamic financial industry becomes a stand-alone industry with a full vision, which will enable Algerians to get rid of usurious transactions which has lasted for decades, according to the spokesperson.
To this effect, Prime Minister, Ayman Benabderahmane, had previously announced a close review of the loan and monetary law, which will address several points, foremost of which is the inclusion of Islamic banking, the independence of the Bank of Algeria, the rehabilitation of monetary policy tools, licensing of payment service providers to enter the national payment system and enabling brokers for the first time to enter the interbank currency market and regulate the micro-loan, in addition to resorting in the future to activating the financial lease and the capital market.

This will be part of new mechanisms for financing the economy, in addition to encouraging Islamic finance so as to mobilize savings and absorb liquidity from the informal market, and issue participatory bonds of the type of “sukuk”.