Proposed Legislation Will Permit Expansion of Shariah-Compliant Banking In Afghanistan

Bloomberg reported yesterday that Afghanistan's central bank is drafting legislation to present to Parliament in September to allow existing non-Islamic banks to convert into fully Shariah-compliant banks and provide for the licensing of new Islamic banks. If approved by Parliament, Da Afghanistan Bank plans to issue licenses for up to six Islamic banks by the end of 2012.  The new law will allow banks that now offer only limited Shariah-complaint products (such as loans and savings accounts) to expand to offer Shariah compliant debit cards and investments. The government also plans to sell its own Shariah-compliant bonds in the future.  Only about 10% of Afghanistan's population currently use banks.