Applications of Constructive Possession (Al-Qabd Al-Hukmi) in the Libyan Banking System and its Resulting Economic Impacts

Abstract

This research aims to study the applications of the concept of "Constructive Possession" (al-Qabd al-Hukmi) in Libyan banks in light of the transition towards the Islamic banking system. Constructive possession is defined as the discretionary empowerment that takes the place of actual possession and entails its legal effects, without the need for physical custody. The study examines the regulatory framework of Islamic banking in Libya and reviews the forms of constructive possession actually applied in Libyan banks, such as instant bank crediting, electronic cards, and instant transfers, while analyzing the resulting economic benefits and the challenges facing implementation. The research found that Libya is witnessing remarkable development in adopting constructive receipt systems with the support of the Central Bank of Libya, especially after the adoption of the Banking Sector Governance Guide in November 2024, which contributed to facilitating transactions and addressing the liquidity crisis. However, this transformation faces challenges related to weak technical infrastructure, cybersecurity risks, and low financial literacy, necessitating the development of infrastructure, strengthening oversight, and unifying Sharia standards.