The order is effective immediately but gave lenders a grace period until 31 December 2011 to shutter operations.
The directive is ostensibly because the Qatari regulator feels that there is widespread mixing up of conventional and Islamic funds, which consequentially comprise the Shariah compliance of the Islamic banking windows.
The banks affected by the decision include QNB, Commercial Bank of Qatar, Doha Bank, IBQ, HSBC, Ahli Bank and Alkhaliji.
These banks have nearly 16 branches entirely devoted to Shari’ah-compliant banking which have a customer base of around 70,000 to 80,000.
According to media reports, HSBC Amanah, the Islamic banking unit of HSBC, has already initiated negotiations with the central bank to find a workable solution.
The Islamic banking sector has a 20% market share of the total banking industry in Qatar.
It was way back in 2005 that the Qatar allowed conventional banks to launch Islamic Banking Units.
