Parliament’s backing of a proposal to force all financial institutions in Bahrain to switch to Islamic banking has been described as a “catastrophic setback” by the head of the Central Bank of Bahrain (CBB). If the proposal makes it into law it will have major consequences for Bahrain’s financial sector, since all institutions would be forced to adapt to a Sharia-compliant model.
If the official draft of the legislation is later approved by the upper and lower chambers of the National Assembly, financial institutions would have three years to comply. The Supreme Islamic Council has backed the proposed bill saying that Bahrain should start enforcing Islamic banking practices gradually but within a set time frame.
One of the critics of this plan is MP and religious scholar Majid Al Majid, who last week claimed that traditional loan systems were more Islamic than Sharia-compliant financial instruments. The CBB also issued a statement strongly opposing the bill saying “We can’t interfere in people’s choices and force them to accept a particular (banking) method”.