Friday, February 20, 2015 6.08PM/CBN
An essential governance structure and element of regulatory oversight for institutions offering non-interest (Islamic) financial services is the establishment of an advisory body at the level of the Central Bank to provide assurance that the strategic direction and conduct of financial transactions of Non-Interest (Islamic) Financial Institutions (NIFIs) are in compliance with the rules and principles underpinning their operations.
Section 9.1 of the CBN Guidelines for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria provides for the establishment of an advisory body at the CBN on Islamic banking and finance. The body shall be called the Financial Regulation Advisory Council of Experts (FRACE). The Council shall advise the CBN on matters relating to Islamic commercial jurisprudence for the effective regulation and supervision of NIFIs in Nigeria.
Pursuant to that Section, this Guidelines have been developed and issued to guide the operations and activities of the FRACE. It sets out the membership, composition, qualification, duties and responsibilities of the FRACE among others.
The Guidelines is to:
a. Set forth the composition of the FRACE and the minimum qualification of its members;
b. Define the duties and responsibilities of the Council and its members;
c. Define the working relationship between the FRACE and the individual Advisory Committees of Experts (ACE) of NIFIs; and
d. Outline a code of conduct for members of the FRACE.
3.0 ESTABLISHMENT OF THE FRACE
3.1. The FRACE shall be established as an expert advisory organ to advise the CBN on matters of Islamic commercial jurisprudence as they relate to the operations of NIFIs. Members of the FRACE shall be appointed on a part-time basis.
4.0 MEMBERSHIP OF THE FRACE
The appointment of members of the FRACE shall be for a term of two (2) years, renewable subject to satisfactory performance.
The FRACE shall comprise a minimum of five (5) members. The Special Adviser to the Governor on Non-Interest Banking shall be a member, while the Director, Financial Policy and Regulation Department shall serve as the Secretary
4.3.1 A member of the FRACE shall be an individual and not a corporate body or institution;
4.3.2 A member shall at a minimum possess required knowledge, expertise and experience in the field of Islamic Jurisprudence with specialization in the field of Islamic Commercial Jurisprudence.
4.3.3 A member should also demonstrate:
(i) Knowledge in the philosophy of Islamic law,
(ii) Knowledge of written and spoken Arabic as well as English languages and
(iii) Exposure in the field of business, economics or finance especially Islamic Finance.
A member of the FRACE shall be disqualified and cease to serve as a member if he/she:
i. Is found to be of unsound mind or is incapable of carrying out his/her duties as a result of ill-health or
ii. Is declared bankrupt or suspends payments or compounds with his/her creditors including his/her bankers; or
iii. Is convicted of any offence involving dishonesty or fraud by a court of competent jurisdiction; or
iv. Commits serious misconduct in relation to his/her duties; or
v. Fails to attend 75% of the meetings of the FRACE in a year without satisfactory reasons; or
vi. Has his/her appointment with a NIFI or any other financial institution terminated or has been dismissed for reason of gross misconduct, fraud or dishonesty;
vii. Is disqualified or suspended from practicing his profession in Nigeria by the order of any competent authority made in respect of the person where he/she is a member of a professional body.