Libya has approved an Islamic banking law that will introduce sharia-compliant banking in the North African country, according to a member of the ruling National Transitional Council (NTC).

Libya has been working to amend its banking laws to attract foreign investment and stimulate its private sector following last year's war that ousted Muammar Gaddafi, the central bank governor has said.

NTC Chairman Mustafa Abdul Jalil said in October Libya's new rulers were working on an Islamic banking system. The central bank submitted a proposal on this to the council for approval in the last few months.

'The NTC has adopted the central bank's proposal regarding Islamic banking,' Salwa Al-Dgheily, a member of the NTC judicial committee, told Reuters on Thursday. She said it was up to the central bank to now announce the law.

The central bank has been looking to update a 2005 banking law which first allowed foreign banks into Libya.-Reuters