RegAlert

Rule · BCD · 17 Mar 2013

Bai Salam Operations

islamic-finance

The Central Bank of Djibouti issued Instruction 2012-07 to regulate Bai'salam operations, defining key terms such as Buyer, Seller, Product, and Parallel Bai'salam. The Instruction mandates that Bai'salam contracts expressly specify the parties' rights, product description, pricing, guarantees, and delivery terms. Furthermore, it limits asset holding periods to six months following acquisition, allows debt substitution for product prices, and subjects Islamic banks to general credit institution regulations unless otherwise stipulated.

DjiboutiBanque Centrale de Djibouti

BANQUE CENTRALE DE DJIBOUTI
INSTRUCTION 2012-07 ON BAI SALAM OPERATIONS
(Forward Sale with Advance Payment)

The Governor of the Central Bank of Djibouti,
Having regard to Law No. 116/AN/06/6ème L of January 22, 2011 on the establishment of Islamic banks in Djibouti, Having regard to Law No. 18/AN/06/6ème L of January 22, 2011 amending the Statutes of the Central Bank of Djibouti, Having regard to Law No. 119/AN/06/6ème L of January 22, 2011 on the establishment and supervision of credit institutions and financial auxiliaries, Having regard to Decree No. 2011-la/PRE of January 24, 2011 appointing the Governor of the Central Bank of Djibouti, Has decreed:

For the purposes of applying the provisions of this Instruction, the following terms mean:
Bai'salam: A contract under which the Buyer advances a certain sum in cash to the Seller in exchange for a specified quantity of movable goods at an agreed date. Product: The movable goods sold, subject to the Bai'salam contract. These goods are fungible or standardized items. Seller: The contracting party that receives the advanced cash sum. Buyer: The party that advances the cash sum to purchase the product.

Parallel Bai'salam: An independent Bai'salam contract, parallel to the first, under which the seller of the latter Bai'salam contract becomes the buyer or vice versa.

A Bai'salam contract must at least expressly and precisely include the following elements:
Article 2:

  1. The rights and obligations of the contracting parties, in a manner that proves the transaction is a Bai'salam operation.
  2. A clear description of the product subject to the Bai'salam contract (nature, type, characteristics, quantity...).
  3. The price of the product, as well as all expenses, taxes, and duties paid by the Buyer, and the payment date.
  4. The guarantees provided by the Seller.
  5. The delivery date and terms for the product subject to the contract, and the procedures to be followed in case of non-delivery by the scheduled date.

Article 3:
When establishing the Bai'salam contract, debts owed by the Seller or a third party to the Buyer may be used in place of the product price.

Article 4:
Assets acquired by an Islamic bank as a result of Bai'salam operations may not be held for a period exceeding six months. The Central Bank of Djibouti may renew this period or require the Islamic bank to comply with any measures it deems necessary for the liquidation of said assets.

Article 5:
In addition to the provisions of this Instruction and unless otherwise stipulated, Islamic banks are governed by the provisions, regulations, and principles applicable to credit institutions in general.

Article 6:
This Instruction shall enter into force upon its promulgation.

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RegAlert holds no document that amends or replaces this one. This is not a check that it is in force: confirm with the regulator.

Decree No. 2011-la/PRE of January24, 2011Not in RegAlertDecree No. 2011-la/PRE of January 24, 2011 — Not in RegAlertLaw No. 116/AN/06/6 dated2011-01-22Not in RegAlertLaw No. 116/AN/06/6 dated 2011-01-22 — Not in RegAlertLaw No. 119/AN/06/6 dated2011-01-22Not in RegAlertLaw No. 119/AN/06/6 dated 2011-01-22 — Not in RegAlertLaw No. 18/AN/06/6 dated2011-01-22Not in RegAlertLaw No. 18/AN/06/6 dated 2011-01-22 — Not in RegAlertBai Salam Operations2013-03-17 · this documentBai Salam Operations (2013-03-17)
amendssupersedesissued underrefers todashed card: not in RegAlert (or proposed)arrows run from the older text to the one that changes it
The links and the sentences they come from (4)
Issued under
  • Decree No. 2011-la/PRE of January 24, 2011Not in RegAlert

    “Having regard to Decree No. 2011-la/PRE of January 24, 2011 appointing the Governor of the Central Bank of Djibouti,”

  • Law No. 116/AN/06/6 dated 2011-01-22Not in RegAlert

    “Having regard to Law No. 116/AN/06/6ème L of January 22, 2011 on the establishment of Islamic banks in Djibouti,”

  • Law No. 119/AN/06/6 dated 2011-01-22Not in RegAlert

    “Having regard to Law No. 119/AN/06/6ème L of January 22, 2011 on the establishment and supervision of credit institutions and financial auxiliaries,”

  • Law No. 18/AN/06/6 dated 2011-01-22Not in RegAlert

    “Having regard to Law No. 18/AN/06/6ème L of January 22, 2011 amending the Statutes of the Central Bank of Djibouti,”

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Source: Banque Centrale de Djibouti — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works

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