The Syrian Government has approved the draft Islamic Banking Law, covering the activity of Islamic banks. The law will now go to Parliament for final approval.
According to Minister of Finance Mohammad Hussein this new Islamic regulation limits foreign ownership of Islamic financial institutions to 49%, similar to that of conventional banking. One main difference, however, is the requirement that the minimum capital of these banks should stand at US$95.77 million (SYP5 billion) instead of US$28.73 million (SYP1.5 billion) for non-Islamic banks. He did not explain what justified this difference.
Several applications for Islamic banks have been put forward to the Syrian financial authorities. The most advanced of these ventures is the project of the Qatar International Islamic Bank in partnership with the Daaboul Economic Group.
Other financial institutions that have shown interest to invest in this field include the Al Baraka Islamic Bank, the Islamic Development Bank, Dallah al Baraka and the Dubai Islamic Bank.
The potential for Islamic banking is still difficult to assess in Syria, but most analysts estimate it to be promising. Many Syrian investors have, for instance, refused to enter into the capital of existing banks on the ground that earning interest is contrary to Muslim teaching.
Six banking ventures have obtained a license to operate in Syria and three of them have already opened their doors. Four of these projects are under management of Lebanese banks (BLOM, BEMO, Bank Audi and Byblos Bank) and the other two are majority-owned by Jordanian banks (The Arab Bank Group and the Housing Bank for Trade and Finance).