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Nigeria: Islamic Banking – CBN Pegs Capital Base At N10 Billion

Lagos — Following the release of framework for the regulation and supervision of institutions offering non-interest financial services in the country on Tuesday, the Central Bank of Nigeria (CBN) said on Wednesday in Lagos that it has pegged the minimum capital base for Islamic banking at N10 billion for National and N5 billion for regional operation.

Speaking at a seminar on non-interest banking in Nigeria, organized by Apostle in the Market Place, the CBN deputy governor, Kingsley Moghalu said the operational guideline would soon be ready and called interested Nigerians in the specialized banking scheme to forward their applications to the apex regulatory body for processing.

He assured Nigerians that non-interest banking is part of the CBN’s plans to increase the inclusion into the financial system of people who have stayed out of the banking system for various reasons.

Speakers at the event had criticised the new banking policy as being against non-shariah compliant members of the society.

Specifically, Eghes Eyieyien, group chief executive officer, Pharez Limited said the introduction of Islamic banking is against the revised BOFIA Act of 1999, saying bank with religion connotation is illegal and capable of disunitying the country.

He said by insisting that non-interest banking products must be Shariah compliant and by establishing advisory council of experts or Shariah council, CBN is unjustly excluding non-Shariah compliant session of the country.

He said there is danger in CBN issueing FG’s loan in accordance with Shariah law

However, Moghalu in his respond said Shariah banking is an aspect of non-interest banking and urged financial experts with different models to put the idea across to the CBN. He said non-interest banking is not about religion but finance.

“I want to assure Nigerians that there is no agenda, it is simply finance and not about religion. I want to assure Nigerians very clearly that non-interest banking is open to people of all faiths and all types of non-interest bank applications are welcome at the Central Bank of Nigeria. Those applications could be based on Islamic commercial jurisprudence or other type of monetary banking. There is a level playing field. There is no discrimination. No need to panic or raise unnecessary fear,” he said.

On shariah Advisory council, Magholu said it is an experts advisory council and of non-interest banking under the principle of Islamic commercial jurisprudence.

“All banks that are Islamic banks around the world have such council therefore, the regulator in this context thought there is a need for such a council that advices it on the compliance of the products that those banks will issue with the principle of Islamic bank jurisprudence,” he said.

On the name Islamic bank, the deputy governor said there is no bank with such name currently in operation in Nigeria. “What the BOFIA says is that except with the permission of the governor of CBN, no bank can be named Islamic, Biblical bank and right now in Nigeria no bank is named officially an Islamic bank,” he said.

While explaining the reason behind the released of a new framework against the one issued in January this year, Moghalu said the CBN discovered that there were fundamental errors in the earlier framework. “After listening to people’s opinion, comments, advises, the committees met and we reviewed all the submission and discovered there were some errors in the first guideline so we cancelled it. On membership of Islamic Finance Regulatory body, the deputy governor said CBN was admitted as an observer in 2008 but got full membership in 2009.

Anthony-Claret Onwutalobi
Anthony-Claret Onwutalobi
Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC and CEO of Portia Web Solutions. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.

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