Islamic Banks and Windows in Algeria

Two pioneers and a public-sector wave

Al Baraka Bank Algérie, founded in 1991, and Al Salam Bank Algeria, operating since 2008, were for decades the only Islamic banks. Everything changed in 2020 when public banks were authorised to open Islamic windows, starting with BNA and followed by CPA, BADR, BEA, BDL and CNEP-Banque.

Several private banks with foreign shareholders, such as Gulf Bank Algeria and Trust Bank, also offer Islamic products. Public banks have since discussed creating a dedicated public Islamic bank, an idea reported in the Algerian press in 2024.

The regulatory framework

Regulation No. 20-02 of the Banque d’Algérie, adopted in March 2020, defines Islamic finance operations and the conditions for practising them. It lists the permitted contracts, requires separation of windows from conventional activity and makes prior Sharia certification of each product compulsory.

Certification by the national Sharia authority

Each product needs a certificate from the national Sharia authority for Islamic finance attached to the High Islamic Council, followed by Banque d’Algérie authorisation. Every bank must also appoint an internal Sharia supervisory committee of at least three members to monitor compliance.

This two-step approval means a product marketed as Islamic without a certificate is not compliant under Algerian rules. Customers can ask any branch to show the certificate reference before signing a contract or opening an investment account.

A legal basis in the 2023 banking law

Law No. 23-09 of June 2023, the new Monetary and Banking Law, gave Islamic finance an explicit statutory basis for the first time. It confirms that banks may conduct operations compliant with Sharia and gives the Banque d’Algérie powers to regulate them.

Which contracts are allowed

Regulation 20-02 covers murabaha, musharakah, mudarabah, ijara, salam and istisna’a for financing, plus wadiah current accounts and investment deposit accounts. Murabaha dominates retail use, especially for locally assembled cars and household equipment, while ijara serves professional equipment and property.

Current accounts carry no return, while investment accounts share profits according to a ratio fixed in advance. Customers should read the account conditions, since investment deposits are exposed to the results of the financing they fund.

Home finance in practice

Al Baraka offers Dar Al Baraka for housing, including financing of LPP promotional public housing, and public banks use ijara muntahia bittamleek or murabaha for home purchases. Recent offers also target Algerians living abroad who want to buy property at home.

Taxes and registration

Successive finance laws have aimed to align the tax treatment of Islamic operations with conventional credit, so that the double sale in murabaha does not create double registration duties. Buyers should still confirm with the notary which duties apply to their specific transaction.

Deposit protection

Islamic deposits are covered by the Algerian deposit guarantee fund like other bank deposits. Investment accounts are treated differently because the customer accepts profit and loss sharing, so their protection depends on the account terms approved by the regulator.

Opening an account and getting financed

1. Choose an Islamic bank or the Islamic window of a public bank near your home or workplace.
2. Open an Islamic cheque account with national ID, proof of address and proof of income.
3. Ask for the product sheet and Sharia certificate of the financing you need.
4. Provide the pro forma invoice or sale promise for the car, equipment or property.
5. Agree the price, margin and instalments, and sign the murabaha or ijara contract.
6. Let the bank pay the supplier directly and take delivery of the asset.
7. Repay instalments from the account; late penalties go to charity, not to the bank’s income.

Costs and documents

Frequent pitfalls

• Assuming every branch of a public bank offers Islamic products; only designated windows do.
• Asking for cash financing, which murabaha does not allow.
• Choosing an imported or ineligible vehicle when the product covers only locally produced models.
• Ignoring the Sharia certificate and buying a product marketed as “halal” without approval.
• Missing instalments in the belief that no penalty applies.

Comparing private and public providers

Al Baraka and Al Salam have longer experience and broader product ranges, but fewer branches. Public bank windows offer nationwide reach and are often cheaper on account fees, yet their financing catalogue remains narrower and processing times can be longer.

Is Islamic banking in Algeria really separate from conventional banking?

Windows must keep separate accounts, funds and reporting, and the internal Sharia committee checks this separation. Customers cannot verify it directly, but the published Sharia certificate and audits are the formal guarantees, together with Banque d’Algérie inspections of each window’s compliance with Regulation 20-02.

Can Algerians abroad use these products?

Yes. Several banks offer accounts and property finance to the diaspora, generally requiring income proof from abroad and transfers in foreign currency. Conditions vary widely, so compare offers before committing and check whether the bank requires a power of attorney for a relative in Algeria.

Do Islamic banks receive state housing subsidies?

Public housing programmes such as LPP have been opened to Islamic financing, allowing buyers to combine Sharia-compliant products with state schemes. Eligibility depends on the programme and the bank’s agreements with the housing agencies.

How long does certification of a new product take?

The bank must first obtain the Sharia certificate, then Banque d’Algérie authorisation, which can take several months. This explains why new Islamic products appear gradually and why offers still differ noticeably from one bank to another, even for similar products such as car murabaha.