Diversification of Islamic Financial Instruments

Overview of the Sudanese Banking System:

As shown in the following Table, the number of Islamic banks increased form five Islamic

banks in 1980s to reach 37 Islamic banks in 2015. All these banks are operating according to

Shariah

principles and under the supervision of Central Bank of Sudan. These Islamic banks

vary in their activities and the type of entities that established them.

Table 38. Structure of Sudanese Banking System (2015)

(a) Specialized banks

Joint

Governmetal

(b) Commercial banks

Joint

Governmental

Foreign

Total (a) + (b)

Source: Central Bank of Sudan – Banks Affairs Department

Moreover, it is also realized that the majority of the Islamic banks in Sudan are joint ventures

between the private and the governmental entities, while the foreign banks come at the second

place with 8 Islamic banks and only one Islamic bank that is fully government known as Al-

Nilein Bank. From another perspective, 31 of the Islamic banks in Sudan are commercial, 6 are

specialized Islamic banks that have social and economic goals besides, providing finance to

agriculture and to industrial projects and family savings.

All banks in Sudan are under the supervision and monitoring of a higher

Shariah

commission.

According to chapter [3] of the Banking Business Act for the year 2003:

There shall be

established an independent part time commission, to be known as the, “Higher Sharia

Commission of Control on Banks and Financial Institutions”, and to be appointed by the President

of the Republic, in consultation with the Minister. The objectives of the Higher Shariah

Commission are to: to pass the sharia edicts, recommendations and consultancy, for a unifying

Shariah bases and ordinances, upon which the banking and financial activity is based; to follow-

up the policies and performance of the banks activities and the financial institutions, for the

purpose of exposing the same to the regulations and the values of the Islamic Sharia; to purify the

laws and the regulations and to provide guidelines for the banks and financial institutions, usury

transactions, to strive to lay down for execution, to provide Islamic forms of transactions and

devise such forms, as may be appropriate to all the needs and instruments of financing, and to

promote the same as may be suitable for the primary and secondary stock exchanges.

Deposits

Official data shows that banking deposits in Sudan exceeded 8.3 billion USD in 2015, 51% of

them are saving and investment deposits and the remaining are demand deposits. Analysing

this 51% of saving and investments deposits, it is found that 94% of these deposits come from

private sector which consists of individuals and private businesses, and this shows the

confidence on the Sudanese banking system as saving and investing channel. The Table (Total

Deposits) below presents the structure of deposits according to the type of depositors and

deposits.