The Central Bank Governor, Sanusi Lamido Sanusi, has said that the draft regulatory framework on Islamic banking in Nigeria is currently being fine-tuned and would be made public soon.
In March 2009, the CBN released a framework for non-interest banking.
Operators are sceptical
Industry analysts are, however, sceptical at how soon "things will be in place" in the near future, as promised by Mr. Sanusi, to provide a suitable environment for the expansion of Islamic banking services in Nigeria.
An official at First Bank told NEXT in confidence: "Given the present state of the banks right now, most of the banks are still trying to sort themselves out; they are busy working on maintaining a fair balance sheet and trying to keep ahead of the impact of losses staring them in the face.
"It would be quite unrealistic to consider setting up a new establishment. This is because we cannot use our present funds; we have to raise fresh funds. The framework states that the funds cannot be mixed; they are separate entities," he said.
However, another official at Oceanic Bank explained that setting up an Islamic bank with new funds may not be a big deal, depending on the people who decide to establish the company. "If people decide to come together with their funds, they would be able to set up these new banks," he said.
Pomoting Islamic banking
The News Agency of NIgeria had quoted Mr. Sanusi as saying that the regulatory framework for Islamic banking in the country seeks to create the enabling environment for attracting the "multi-billion dollar global Islamic finance industry to the country".
He said: "The reforms in the banking sector initiated by the CBN in 2004 provides for a regulatory framework for Islamic banking in the country," adding that the operation of Islamic financial system had suffered a setback in the country, "partly because of lack of the requisite knowledge and a capacity to regulate it."
NAN had reported that Mr. Sanusi gave the banking update last weekend at the 11th Annual Ramadan Symposium, organised by the Movement for Islamic Culture and Awareness in Kaduna.
He, however, gave the assurance that the CBN was adopting measures aimed at an "extensive capacity building through collaboration amongst stakeholders to develop a cognate expertise in non-interest banking."
On his word
During his screening at the Senate in June 2009, Mr. Sanusi, had stated: "It is important we make sure that people don't say they are offering Islamic banking while they are actually running conventional banking. You need the knowledge of the modern banking and of Islamic banking in Malaysia, the Arab World, and Pakistan to be on the committee,
"The services would be available to Muslims and non-Muslims. It is not a religion; it is a product available to the public. If things are set in place, I would be in support," he added.
Islamic banking in Nigeria
The CBN defines Islamic banking as "non-interest banking". "A non-interest bank means a bank which transacts banking business, engages in trading, investments and commercial activities, as well as the provision of financial products and services, in accordance with the principles and rules of Islamic commercial jurisprudence."
"Transactions and contracts under this type of banking are non-permissible if they involve "interest; uncertainty or ambiguity relating to the subject matter, terms or conditions; gambling; speculation; unjust enrichment; or exploitation/unfair trade practices."
Reader Comments (28)
post a comment
* = Required information