Libya hopes to have its first three dedicated Islamic banks operating next year to satisfy unmet demand for sharia-complaint financial services, a senior central bank official said on Wednesday.
Under former dictator Muammar Qaddafi, overthrown in 2011, the growth of Islamic banking was not encouraged and the entire financial system was kept undeveloped, as four state-controlled institutions dominated the industry.
Libya is now trying to build a modern financial system and has passed rules to cover Islamic finance, although political instability and a chaotic security situation are slowing its progress.
Authorities have decided to issue three Islamic banking licenses and the central bank has received five applications from local investors, which are currently being evaluated, said Abdulmajeed Almaguri, deputy director of the central bank’s banking supervision department.
He did not name the potential investors but said the evaluation process would be completed after four to five months.
“There is good demand for Islamic banking and we want a balance between conventional and Islamic banking,” Almaguri told Reuters on the sidelines of an Arab central bankers conference in Abu Dhabi.
Currently the 16 banks operating in Libya, including seven foreign banks, offer mainly conventional banking services with some providing interest-free Islamic banking through sharia-compliant windows, he said.