Regulatory Alerts2013-03-17
On Moucharaka or Participation Operations Conducted by Islamic Banks
Issued by the Governor of the Central Bank of Djibouti, Instruction 2012-04 establishes the regulatory framework for Moucharaka and participation operations conducted by Islamic banks, defining their structures as either constant or decreasing partnerships with limited liability. The regulation mandates that Moucharaka contracts explicitly specify the project objective, contribution volume and form, duration, management responsibilities, profit and loss distribution percentages, agent guarantees, and termination procedures, while prohibiting capital repayment clauses within the primary contract unless documented separately for decreasing Moucharaka. Furthermore, it restricts Islamic banks from holding liquidated partnership assets beyond six months unless the Central Bank grants an extension or orders specific liquidation measures, and confirms that general credit institution regulations apply unless otherwise stipulated.