The Hamas government in the Gaza Strip announced Tuesday the opening of an Islamic National Bank, even though the bank is not recognized by the Palestinian Monetary Authority, an organ of the Palestinian Authority in Ramallah.

Seventeen founders invested a total of $4 million to establish the bank, which began issuing stock to the public in March; their initial goal is to reach reserves totaling $20 million. The bank will operate in accordance with Islamic banking laws, whose fundamental principles are based on sharing profit and loss.

The bank will be responsible for transferring the wages of civil servants employed by the Hamas administration in the Gaza Strip. A total of 6,000 Hamas civil servants will receive their salaries through the bank for the first time this month.

The director of the bank's board, Dr. Ala' al-Rifati, told Haaretz that the services the bank offers its clientele will expand with time. Starting on May 1, the bank will initiate its first loans to individuals, with repayment schemes at a maximum of seven years.

The opening of a bank three months after Israel's offensive in the Gaza Strip is considered an achievement for the Hamas-dominated administration in the Strip, and a challenge to the international blockade. One of the main characteristics of the blockade on the Strip has been the limitations imposed on banking.

With the exception of the Bank of Palestine, which was set up in the 1950s and whose main offices are in Ramallah, the rest of the banks in the territories are branches of banks based abroad. In order to avoid being boycotted by international banks, fund transfers and the opening of new accounts in Palestinian banks are subjected to strict oversight.

Another major difficulty is that the Bank of Israel does not allow enough money to reach Palestinian banks in the Gaza Strip; this undermines the Palestinian Authority, which has to pay the salaries of tens of thousands of civil servants, as well as make welfare payments.

Rifati told Haaretz that because the banks limited the amount of cash people could withdraw from their accounts, the public has lost faith in the institutions. He says the shortage in cash stems primarily from the lack of deposits, and that his bank will seek to restore the confidence of the population in the institution and encourage them to deposit their cash in accounts. One obvious advantage the bank has is that it lacks any competitors.

During the past year the Hamas administration began collecting taxes in cash, which independent analysts say have enabled them to accumulate shekels and use them to pay salaries.