Morocco seeks Islamic financial system

Moroccan banks may introduce the concepts and practices of sharia (Islamic law) finance and banking to the public, thanks to recent tax rate changes. The new tax rates means that sharia-approved alternative banking products will be charged the same taxes as traditional banking products and loans.

As of January 2010, the VAT on alternative banking products like Mourabaha and Ijara will be 10%, as opposed to the 20% that was previously charged.

Lenders will offer leasing (Ijara) products, whereby they rent an asset to a customer who may later be able to buy it at a fixed date, while Mourabaha will allow a lender to buy an asset and re-sell it to a client at a margin decided in advance.

Many Moroccan welcome this alternative banking practices especially the ones who reject the concept of bank interest. Thought Moroccans who had reservations about accepting traditional bank loans will be able to finance a loan.

Lending companies will market these products via their subsidies. These services are regulated by “the Accounting and Auditing Organization for Islamic Financial Institutions”, a Bahrain-based organization that includes 130 members from 29 countries.

Islamic or Sharia banks differ from regular banks in two major ways. As commanded in the Coran, the charging of interest is prohibited in all monetary transactions. The other defining feature of Islamic banks is that a board of Islamic scholars and clerics whose job it is to ensure that the banks’ activities comply with Islamic law supervises them.

Source : Africa news