Conditions for Practicing Islamic Banking and Related Banking Operations in Algerian Legislation

Abstract

This article analyzes the regulatory framework governing Islamic banking in Algeria, tracing its historical evolution from early colonial-era initiatives through post-independence reforms to its formal consolidation under Order 03-11 (2011), Regulation 20-02 (2020), and the Monetary and Banking Law No. 23-09 (2023). The first section examines the conditions for practicing Islamic banking, which may occur via fully dedicated institutions or independent Islamic windows within conventional banks, requiring financial, accounting, and administrative separation. It mandates internal Sharia supervisory boards, prior compliance certification from the National Sharia Board, licensing by the Monetary and Banking Council, subsequent approval by the Bank of Algeria Governor, and adherence to capital, integrity, competence, and prudential requirements. The second section details the Sharia-compliant operations permitted under Regulation 20-02—murabaha, musharaka, mudarabah, ijarah, salam, istisna‘, deposit accounts, and investment accounts—outlining their legal-jurisprudential foundations, characteristics, variants, and implementation mechanisms in Algerian banks, while underscoring prohibition of riba and strict Sharia adherence. The article concludes that Algeria has developed a relatively comprehensive licensing, Sharia, and supervisory regime for Islamic banking. Nevertheless, practical challenges persist in professional training, jurisprudential harmonization, and regulatory coordination. Recommendations include enacting a dedicated Islamic banking law, enhancing Sharia board independence, and advancing specialized capacity-building to bolster effectiveness, financial inclusion, and sustainable development.