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March 2011
REVIEW OF ISLAMIC FINANCE INDUSTRY

The Central Bank of Nigeria was able to come up with new frameworks that include the guidelines for non-interest banking which is same as Islamic finance banking. Conventional banks and other financial institutions can offer or sell Sharia-compliant products and services through subsidiaries or branches. The guidelines covers banks or subsidiary, microfinance banks or subsidiary, development finance institutions, primary mortgage institutions and finance companies registered to offer such services.

Giving the increasing number of request from persons, banks and other financial institutions desiring to offer Sharia compliant products and services in Nigeria, the CBN has developed the framework on non-interest banking and other financial services, it said.

The Central bank added that such non interest financial institutions are required to establish a Sharia Advisory body as part of their governance structure to be known as “Sharia Advisory Committee” (SAC), which shall operate as an independent body, with the principles of competence, confidentiality and consistency properly enshrined in its operations.

“It is expected that an independent SAC will command public confidence, herby promoting the growth and development of the industry,” it added.

Non interest financial institutions refer to banks or other financial institutions under the purview of the CBN which transact businesses, engage in trading, investment and commercial activities as well as provision of financial products and services, in accordance with Sharia principles and rules of Islamic commercial jurisprudence.

Transactions, instruments and contracts under this type of services are non-permissible if they involve interest, uncertainty or ambiguity relating to the subject matter, terms or conditions gambling, speculation and unjust enrichment and exploitation or unfair trade practices, the circular said further.

“Other non-permissible transactions include dealing in pork, alcohol, arms and ammunition, pornography and other transactions, products, good s or services which are not compliant with Sharia rules and principles,” the circular added.

There has been mixed impression about the pace of Islamic banking in Nigeria. However, the country has not been able to tap into the global Islamic funds market currently valued at $750 billion, and is expected to grow exponentially every year.

 

Publications


  Growth Of Islamic Finance And The Critical Role Of Lawyers

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Home/Office Acquisition Finance And The Islamic Banking Solution: Why Declining Co-Ownership Partnership (DCP) Can No Longer Be Ignored.

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  Is Africa Really The Next Big Thing In Islamic Finance: What Is The Potential For Developing Islamic Finance In African Markets?

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Useful Links:


www.cenbank.org

www.theislamicglobe.com

www.sec.gov.ng

www.aaoifi.com

www.isfb.com

www.icd-idb.com

 
 
 
 

 

 

 

 

 

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