FAFI emphasizes efforts to develop Islamic finance
Tehran (IQNA) – The participants of the 7th Algiers Islamic Finance Forum (FAFI), organized in Algiers on Wednesday, noted the progress made by this banking activity since 2020, especially thanks to the “favorable” regulatory framework implemented. effective drain “substantial” savings deposits.
In this meeting held on the theme “Islamic finance is a lever of development in Algeria, a future full of ambitions”, the heads of state and private banks expressed a unanimous opinion on the progress of this banking activity and welcomed the results obtained after the announcement. Regulation No. 20-02 of the Bank of Algeria dated March 15, 2020, which defines the operations related to Islamic finance and the conditions for their implementation by banks and financial institutions.
In this context, Amina Athamnia, head of the Islamic Finance Department of the National Bank of Algeria (BNA), emphasized the efforts of public authorities to increase the activity of this new segment, especially of a fiscal and regulatory nature. Most of the constraints faced have been removed through the supplementary finance law of 2021 and the finance law of 2022.
Taking into account this activity at the BNA level, he confirmed that Islamic finance is available at the bank’s 49 provincial level, with 4 separate branches and serviced branches, since the day it started operating on August 4, 2020. fund management, financing and investment activities in accordance with Shariah rulings.
Regarding the market, Ms. Athamnia argued that Islamic finance is currently a “social claim demanded by customers” and constitutes “an opportunity to diversify the market and the bank’s portfolio.”
He also considered that Islamic finance participated in the financial inclusion policy aimed at diversifying the drainage channels of non-bank funds.
In the same sense, the managing director of Al Salam Bank-Algeria, Nasser Hideur, said that the announcement of the regulation of the Bank of Algeria on Islamic finance in March 2020 and the publication of related texts contributed to the increase of this activity. level of local banks.
“Algeria’s approach to Islamic finance was very wise and very realistic, without any special regulation for this activity, integrating it within the framework of the law on money and credit. The public authorities understood the importance of Islamic finance. It is a vector of financial inclusion and economic growth and raising the level of banking in society. as a factor”, Mr. Hideur also noted.
The CEO of Al Salam Bank also noted the role of public banks in the development of this activity, “its wide network of more than 1,200 bank branches located in the country and allows Algerian citizens, who are very demanding for these products, to use Islamic financial services. “.
Mr. Hideur also said there has been “intensive and painstaking” growth in Islamic finance activities at his institution, citing an average growth rate of 47% in deposits and 50% in term investment deposits, as well as 50% in the past three years. for loans to households and businesses.
For his part, Sofiane Mazari, head of the Islamic finance department of Crédit Populaire d’Algérie (CPA), estimated the amount of deposits recorded by 12 major players in Islamic finance at 550 billion Algerian dinars. , 10% of the market is held by six state-owned banks.
The CPA chief, for his part, noted the “double-digit growth rate for this area”, arguing that the market is “very deep” and that there is a “very important” demand that develops in a “more favorable” ecosystem.
In the same sense, the head of the Islamic finance section of the CPA announced the upcoming use of “sukuk” within the framework of legal provisions related to commercial activities and other legal provisions in the draft law currently under examination. It is prepared at the level of the Ministry of Finance.
According to him, these legal texts will allow market players, especially Takaful insurance companies looking for opportunities to invest their financial surplus, to offer sukuk.
Regarding the evolution of the market, it was emphasized that the repayment of the car loan will have a positive effect on Islamic finance, especially in terms of the start of car production in Algeria.
In this regard, the head of the Islamic finance department of the CPA stated that he is in contact with manufacturers to sign partnership agreements to ensure that the marketing of the new car will increase Islamic finance in Algeria.
For his part, the CEO of Al Salam Bank assured that his institution is ready to purchase car stock to consumers for resellers according to “Mourabaha” (profit margin) formulas.