Capital base for Islamic Banks in Nigeria

The Central Bank of Nigeria, CBN, yesterday announced minimum capital base of N10 billion for National Islamic Banks and N5 billion for regional Islamic Banks.

CBN Deputy Governor, Financial Sector Surveillance (FSS), Dr Kingsley Moghalu, announced this while addressing journalists in Lagos at a seminar on Non-Interest Banking in Nigeria organised by BusinessDay and Apostles in the Market Place.

“For the National Islamic Bank it is N10 billion and for the Regional Islamic Bank it is N5 billion,” he said
Experts who spoke at the seminar, however, faulted the apex bank on introduction of Islamic banking, saying Nigeria is a secular state and the CBN Act does not empower the apex bank to introduce Islamic banking.

Faulting the apex bank on the introduction of Islamic banking, Mr.  Eghes Eyieyien, chief executive, Pharez Limited, a Lagos-based consulting firm, said the “CBN cannot use a guideline to change the law, the CBN is not the National Assembly. If Islamic banking must happen, the CBN should send a draft bill to the National Assembly.”

Moghalu, however, strongly defended the decision of the apex bank to introduce Islamic banking in Nigeria, saying this is covered by the provision for specialised banking in the Banking and Other Financial Institutions Act, BOFIA, and the new banking framework.

He said the new guidelines on non-interest banking was based on a review of the guidelines issued in January in response to comments and concerns expressed by the public.

He said Islamic banking is a type of non-interest banking which is a specialised type of banking, adding that the aim is to deepen financial inclusion and that patronage is optional to members of the banking public.

He, however, said no bank is officially named an Islamic bank but has licensed banks to operate based on Islamic commercial jurisprudence.

He said while the CBN is opened to all applications for any type of non-Interest banking, the concentration for now is on Islamic banking because all the applications received for banking license in recent times have been for Islamic banking.

He said, “I will like to very clearly reassure Nigerians, that non interest banking is part of our plans to increase the inclusion into the financial system of people who have fade out of the banking system for various reasons. I will like to clearly reassure Nigerians that there is no agenda, it is simply finance; it is not about religion.

I want to reassure Nigerians very clearly that non interest banking is open to people of all states 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 they could be based on other types of non interest banking. There is a level playing field, there is no discrimination.

“Let me be very clear, at this point what the law says or what the Banks and  Other Financial Institutions Act says  is that except with the permission of the governor no bank can be named  Islamic or biblical or koranic bank. So right now in Nigeria no bank is named as such. So let’s be very clear that there is no bank named officially as an Islamic bank.

I talked about banks operating under the principles of Islamic commercial jurisprudence so that is the distinction.”
Defending the provision of an  Sharia Advisor Council in the guidelines on non-interest banking, he said, “I explained the issue of expert advisory council; it is because of the nature of non interest banking under the principles Islamic commercial jurisprudence, all banks that are Islamic banks have that sort of council.

Therefore the regulator in this context felt a need of a council that advises it on the compliance of the products that those banks will issue with the principles of Islamic commercial jurisprudence.Nigeria News