Central Bank of Nigeria issues new guidelines for Islamic banking

The Central Bank of Nigeria (CBN) yesterday issued new guidelines for the regulation and supervision of non-interest banking, which Islamic banking is a part.

Under the new guidelines, CBN said discrimination on any grounds in the participation by individuals or institutions as promoters, depositors or other relevant parties in any transaction regarding a non-interest financial institution, whether based on Islamic or other model, is strictly prohibited.

The central bank clarified that Islamic banking is not the only type of non-interest banking contemplated under the new banking model which categorized non-interest banks as part of specialized institutions.

It categorizes non-interest banking and finance into the provision of non-interest financial products and services based on principles of Islamic commercial jurisprudence; and the provision of non-interest financial products and services based on any other established rules and principles.

It said that individuals and groups wishing to practice non-interest banking based on established rules and principles other than Islamic may apply for a license to operate such institutions and the CBN will accordingly issue guidelines pertinent to that type of banking.

The central bank will put in place an advisory council of experts charged with ensuring that financial products offered by such specialized banks meet the minimum requirements of Islamic commercial jurisprudence.

“In relation to non-interest Islamic financial institutions, the CBN will establish an Advisory Council of Experts to advise the CBN on the appropriateness of relevant financial products to be offered by such institutions,” it said.

Under the guidelines, there are non- permissible transactions which include those involving any of the following; Uncertainty or ambiguity relating to the subject matter, terms or conditions; gambling; speculation; unjust enrichment; exploitation/unfair trade practices; dealings in pork and alcohol.

Others are : arms & ammunition, pornography and other transactions, products, goods or services which are not compliant with the rules and principles of Islamic commercial jurisprudence.

Governor of CBN, Sanusi Lamido Sanusi said on Monday that Islamic bond called Sukuk will be issued within eighteen months from now and that Jaiz Bank is expected to commence operation within the next six months.