The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Islamic finance: Libya’s banks struggle with new Shariah rules

State Islamizes banking sector; Potential impact on global sukuk market

Muftah Omar Muftah is animated and optimistic as he talks about the future. "The new system is going to transform the entire economy," enthuses the chairman of Yaqeen Bank, one of three brand-new Islamic banks due to open in Libya in the next eight months. "Islamic banking is about partnership. It will nurture small enterprises, it will create new jobs and develop skills. It will help Libya become a country that can survive without oil."

The three new lenders are part of a banking revolution that started eight months ago and, as with many of the recent uprisings in the Arab world, although the revolutionaries are passionate and the ideas are popular, the execution is proving problematic.

Libya’s newly founded General National Congress passed an Islamic banking law on January 6 this year. It introduced an immediate ban on the levying of interest on retail customers, and set a 2015 deadline for the entire financial system to become Shariah-compliant.

The law has put the country in a singular situation. The only other country that has a financial system that is fully compliant with Sunni Islam is Sudan, and no country has ever managed to fully Islamize its financial system in such a short amount of time.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree