Morocco was the last Muslim-majority country to empower Islamic banking. On January 2, 2017, the central bank announced the approval of five banks to provide products and services in compliance with the sharia.
Morocco has a thriving Islamic finance sector with five participating banks and at least eight traditional banks offering sharia-compliant products.
Islamic banking in Morocco started with Assafa Bank and Umniah Bank and these banks have branches in various cities of Morocco.
On November 2, 2018, the International Islamic Trade Finance Corporation signed a memorandum of understanding on cooperation with Morocco on trade development and increasing trade capacity. Morocco issued its first Islamic bond on November 5, 2018, with a five-year lease-based transaction of MAD 1 billion, with an annual coupon rate of 2.66%.
Despite rapid growth of 110% in Morocco between June 2018 and April 2019, Islamic banking accounted for less than 1% of the banking sector's total loans at the end of 2018.
In Morocco, the sharia-compliant tools, techniques and products developed by the key components of participating financial banks must not only meet the needs of depositors and customers, but also comply with the Sharia provisions stipulated by the Moroccan Central Sharia Board.
Some participating banks allowed their clients to close their investment accounts before maturity without any penalties or fees.
In 2020, the Higher Council of Ulemas approved four types of product-investment accounts, but participating banks only introduced some of them.
Participating banks are expected to improve their return on equity in 2021. They will need to diversify their product offerings, target various segments, and achieve better performance. However, in the context of Covid-19, all plans and expectations can be reviewed.