|Islamic banking draft law slated for approval|
|Finance Minister Fouad Siniora said Tuesday that he did not expect political hurdles to impede the endorsement of an Islamic banking draft law that currently awaits parliamentary approval.
“I am quite sure this issue will be adopted by the general assembly of Parliament,” said Siniora to participants at the second and last day of the Gulf Investors Forum that coincided with the inauguration of the Lebanese-Gulf Islamic bank Arab Finance House (AFH). “We have held meetings with the Association of Banks in Lebanon that revolved around the benefit of Islamic banking to the economy by introducing a number of tools that traditional banks can adopt as well.”
Previously, some Lebanese bankers had been opposed to the idea of introducing Islamic banking here. They argued that its mode of operation could create problems for Lebanon’s banking industry, which is widely seen as the strongest economic sector in Lebanon.
Islamic banking, which follows the Islamic Sharia, or law, prohibits interest payment as a form of usury, or Riba, and employs most of the client’s cash into investments and commercial operations.
On Monday, Prime Minister Rafik Hariri inaugurated Beirut’s AFH, a joint venture joining the Qatari Islamic Bank, the Gulf Finance House of Bahrain and Kuwaiti-based Osoul, with other Gulf investors.
Adnan Qassar, chairman of Lebanon’s Fransabank and head of the Union of Chambers of Commerce in Lebanon, is a major shareholder in the AFH that was set up with an initial capital of $60 million. Investors plan to raise the capital to $100 million over the next three years. “Lebanon has been a bit tardy in entering this field, but the recent approval for setting up a bank before issuing the Islamic banking law in Lebanon emphasizes the Lebanese authorities’ interest in benefiting from Islamic banking and its mode of operation over the next period,” said Siniora.
Investors in the AFH said that they were able to obtain a Central Bank license to operate as a bank due to the intervention of the Finance Ministry and the prime minister, who is eager to lure Arab investors to Lebanon. The license was granted in accordance with existing banking laws, such as the money and credit law.
In recent years a number of Lebanese banks, such as the Bank of Beirut, have introduced some Islamic banking tools.
Some of the Qatari investors in the AFH said that they are also planning to open an Islamic insurance company in Beirut and in Iran.
Siniora said the Arab world needs greater Arab economic joint projects to meet the rising number of entrants to the Arab job market and combat high unemployment rates in the region.
Beirut,01 19 2004
The Daily Star