KUWAIT Oct 1 Libya hopes to start implementing
its new Islamic banking law by the end of the year and expects
strong demand among the public for sharia-compliant financial
services, Libyan central bank governor Saddek Omar Elkaber said
The country approved an Islamic banking law in May and has
been working to amend its legislation to attract foreign
investment and stimulate its private sector following last
year's war that ousted Muammar Gaddafi.
"The demand is so high in Libya so we set up a higher
committee for Islamic finance...Now they are working to set up a
road map for Islamic finance in Libya," Elkaber told reporters
on the sidelines of an Arab central bankers' conference in
Asked when Libya might be able to start implementing the
rules, he said: "Hopefully very soon. Hopefully this year."
He said the authorities envisaged several options for
Islamic banking services. One would be to allow conventional
banks to open branches or windows for Islamic finance; another
would be permitting conventional banks to become Islamic. Libya
is also looking at introducing a special licence for Islamic
banking, he said.
The licensing option is still under discussion because
authorities have yet to agree on capital requirements, he added.
Apparently for ideological reasons, Gaddafi did not support
the development of Islamic banking, which follows religious
principles such as bans on interest and pure monetary
Libya's banking system under his regime was dominated by a
few state-owned institutions; most ordinary Libyans did not use
credit cards and their banking services were largely limited to
basic cash deposits and withdrawals, making it easier for
Gaddafi to keep control over the economy and society.
The country's new authorities want to develop the financial
sector and the central bank has been looking to update a 2005
banking law which first allowed foreign banks into Libya.
Asked whether planned changes to the law might mean that
Libya would start awarding new foreign bank licences soon,
Elkaber said that topic was under assessment.
"We asked the World Bank to do a financial sector review -
they sent the first draft and we need to review it. Then we will
decide," he said. "But Libya will be an open market anyway, for