A Communique on the One Day Sensitization Seminar on Non Interest Banking Deposit Insurance Scheme

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The Corporation organized a One-Day Sensitization Seminar on Non-interest Deposit Insurance Scheme (NIDIS) in Abuja on Wednesday, November 24, 2010.   The salient points and issues highlighted during the seminar are enumerated as follows:
1. The introduction of Non-interest Banking to the Nigerian financial system is long over due, as the practice     constitutes a viable alternative to conventional banking.
2. The practice of non-interest banking will go a long         way in empowering a large segment of the Nigerian population      that is economically active poor, by making available to them financial services/resources at lower costs.
3.  Non-interest banking is in consonance with the      principle of financial inclusion, as it offers a variety of alternative financial products and services to a large group of    low income earners who had felt dissatisfied with conventional         banking.
4  The concept of interest is forbidden in Non-interest        banking, while the emphasis is on direct asset financing in the real sector of the economy such as Projects,    Object, Agriculture, Housing/Real Estate, etc.
5. The extension of Deposit Insurance protection to Non-interest          banks when they are eventually licensed will   promote public confidence in both the insured institutions and   the entire financial system.
6. There is need to establish an independent Shari’ah Supervisory Board (SSB) or Shari’ah Advisory Council (SAC) to ensure Shari’ah-compliance by non-interest financial     institutions. Among other things, such an SAC will be responsible for adjudicating on Shari’ah-related matters.       Similarly, each non-interest bank will have its own SAC to    ensure that the operations of the institution do not conflict with the tenets of Shari’ah.
7.     Non-interest Banks must operate in accordance with      the guidelines and standards set by the International        Accounting Bodies such as the Financial         Accounting         Organization for Islamic Banks and Financial Institutions         (FAOIBFI), Accounting and Audit Organization   for Islamic    Financial Institutions (AAOIFI), International Financial Reporting System (IFRS), etc.
Strict compliance with the    guidelines issued by such bodies will ensure that non-interest banks do not repeat the catastrophic errors that had culminated in the failure of several conventional banking institutions across the globe.
8. By and large, non-interest banks should be seen   primarily as banking businesses that provide services to all and sundry irrespective of religious affiliation.
9.There is need for greater collaboration and cooperation among        the regulatory agencies in Nigeria to drive and fast-track the        implementation of non-interest (Islamic) financial institutions.
10. Given the fact that non-interest banks will be licensed in the new future, the Debt Management Office (DMO) should         expedite action towards the development of veritable debt         instruments for Islamic financial institutions, such as sukuk         (Islamic bonds).
11.  Concerted efforts are being made by regulatory/supervisory   agencies such as the Central Bank of Nigeria (CBN), the   Nigeria Deposit Insurance Corporation (NDIC), the Securities     and Exchange Commission (SEC) and other organizations       like   the Chartered Institute of Bankers (CIBN), the Debt     Management Office (DMO), etc, to create and promote public   awareness of non-interest banks among the Nigerian         populace.
12. Media   practitioners   constitute   major stakeholders in creating public enlightenment on non-interest banking in Nigeria. They were urged to live up to         this expectation in order to enhance financial stability in the country.
13.At the present moment, there is scarcity of scholars       with adequate knowledge of both banking and Shari’ah principles.        Efforts should be made to build capacity for both        regulators/supervisors and operators of non-interest (Islamic)         banking institutions.
14.The seminar acknowledged that the NDIC had developed a Framework for non-interest Banking Deposit Insurance Scheme for Nigeria and had obtained useful comments from various stakeholders.
15.The seminar emphasized the need for Capacity Building on the part of Operators and Regulators/Supervisors for the successful implementation of non-interest banking in Nigeria.
Source:Nigeria Deposit Insurance Corporation (NDIC)
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