From Naijaweb The central bank of nigeria CBN has approved islamic banking in nigeria. The introduction of Islamic banking by the central bank of nigeria CBN has increased banking operations in Nigeria.

This enables the country to have all aspect of banking in Nigeria as the Central Bank of Nigeria (CBN) approved this area of banking operation.

To strengthen the sector, the apex bank mandated all banks offering such financial products or services to have a Sharia compliance review mechanism and a Sharia Advisory Committee (SAC) as part of their governance structure. This would enable the banks to be sharia complaint in its operation.

The central bank of nigeria CBN which is the regulatory authority recently released a draft framework for the regulation and supervision of non-interest banks, otherwise known as Sharia banking in the country.

According to the central bank of nigeria CBN guidelines, in line with the provisions of Section 39 (1) of BOFIA 1991 (as amended), banks offering non-interest banking products and services shall not include the words “Islamic” as part of their registered or licensed name.

“They shall however, be recognised by a uniform logo to be designed and approved by the central bank of nigeria CBN. The central bank of nigeria CBN shall require all the banks’ signage and promotional materials to carry the logo to facilitate recognition by consumers,” the guideline read in part.

The guidelines stated that non-interest banks shall be licensed in accordance with the requirements for new banking licence issued by the apex bank from time to time, adding that this include non-refundable application fee of N500, 000.00 and deposit of minimum capital of N25 billion with the regulator.

According to the central bank of nigeria guidelines, six months after the grant of Approval–In– Principle (A.I.P), the promoters of a proposed bank must also submit application for the grant of a final banking licence with a non-refundable licensing fee of N5 million payable to the central bank of nigeria CBN.

“All licensed banks or promoters wishing to offer non-interest banking products and services, according to the apex bank, may operate using models such as full-fledged non-interest bank or subsidiary which shall be licensed in accordance with the current guidelines for licensing of banks issued by the central bank of nigeria CBN,” it stated.

Other models include a non-interest banking branch of a conventional bank which shall be established in line with extant central bank of nigeria CBN regulation on bank branch expansion.

“A financial institution carrying on non-interest banking business may charge such commissions or fees as may be necessary and shall be guided by the Guide to Bank Charges issued by the Bankers’ Committee.

“The funds received as commissions and fees shall constitute the bank’s income and shall not be divided among the depositors,” the central bank of nigeria guidelines read in part.

Under the guidelines, non-interest banks should not perform transactions that involve interest, uncertainty or ambiguity relating to the subject matter, terms or conditions, gambling, speculation, unjust enrichment or exploitation/unfair trade practices.

“In view of the ethical character of their business, all non-interest banks are required to screen their promoters, shareholders, customers, counterparties, transactions, products and activities against the proceeds of crime, corruption, terrorist financing and other illicit activities using legal and moral filters.
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