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Questions Raised on CBN’s Stance on Sharia Banking

Category: Islamic Finance


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Questions Raised on CBN’s Stance on Sharia Banking

 

 

By Stanley Oronsaye, June 16, 2011 12:09AM
 
 
 
The guidelines on non-interest banking as recently released by the Central Bank of Nigeria (CBN) violate extant relevant laws of the country. This was the consensus of a group of professionals under the aegis of Apostles in the Market Place (AiMP).
 
At a media briefing in Lagos yesterday, the group stated that the CBN guidelines were in violation of the Banks and Other Financial Institutions Act (BOFIA), which regulates operations in the financial services industry.
 
“The current guidelines on non-interest banking, otherwise known as Sharia banking, insist that you be Sharia-compliant for you to establish a non-interest bank. That is to say if I am an Ogun worshipper and I am not ready to lie or subscribe to the demands of Sharia and be Sharia-compliant in my application, I would be denied a license,” the chairman of the forum, Richard Ikiebe, queried, According to Mr Ikiebe, who is a member of faculty of Pan-African University, Lagos, the CBN guidelines cannot be superior to the Constitution which clearly defines Nigeria as a plural and secular state. “What is wrong in saying let’s have Sharia banking, but let’s also have non-interest banking in its fullest so that those of us who want to be involved in non-interest banking will not be denied. As things stand today, if you are not a Muslim, or if you are a Muslim who is not Sharia-compliant, you cannot establish a non-interest bank in Nigeria, according to the guidelines.” He added that the guidelines as prepared by the regulator was capable of causing division in the country. “We are not against Sharia banking. We are saying make room for others. We are saying don’t deny us because Nigeria is for all of us and when you start to create cleavages in the Central Bank, you are laying the foundation for a disunited nation.”
 
Speaking at the occasion, Eghes Eyieyien, the chief executive officer of Pharez Group, a risk ratings and business consulting/investments firm, defined Islamic banking as a subset of non-interest banking and said that should not be taken as its only variant in Nigeria. “One of the challenges of the guidelines is that the CBN purports to redefine what non-interest banking is as if it is synonymous with Islamic banking. It is not. There are various models of non-interest banking.” According to Mr Eyieyien, the guidelines stand in complete contravention of an existing law on non-interest banking. “How could you, without changing that law, issue guidelines contradicting the law? It defines non-interest as financial institutions licensed by CBN which are compliant with Sharia principles and Islamic jurisprudence.” According to Mr Eyieyien, the CBN cannot use a guideline to change the law. “Why would CBN attempt to exclude non-Muslims from non-interest banking? It is illegal.”
 
The financial consultant insisted that the issue was not about religion but one of justice, equity, legality and constitutionality.
 
CBN Governor, Lamido Sanusi, recently insisted that the controversy over the proposed introduction of Islamic banking in the country was “unnecessary” as the regulatory body was not doing anything illegal. According to Mr Sanusi, Islamic banking has nothing to do with promoting religion or any belief but is simply another financial product; non-interest banking designed to diversify the scope of banking services available to customers.
 
“There is nothing called Sharia banking,” the CBN boss was quoted as saying. “There is non-interest banking or Islamic banking, which is a financial product all over the world. This is the only country in the world that I know where Islamic banking is being viewed as a religious issue. But this view is being held by the minority. There is nothing illegal about it. The BOFIA law was amended specifically to allow for it.”
 
 
 
Source: 234NEXT
 

 



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