Friday, June 2, 2023

The Proposed Islamic Banking By Central Bank of Nigeria – The Way Forward

Banking institution is a place where individuals or corporate organizations alike deposit their money for personal or business transactions with the aim of savings, current or fixed transactions that earn profit in a particular period. Nigeria as one of the growing economies of the world has taken the right steps to restructure the banking system in the country. Dating back to the year 2005, where all existing banks were required to recapitalize a minimum balance of twenty five billion naira or the then governor of Nigeria’s apex bank, Prof. The leadership of Charles Chukwuemeka Soludo was at risk of losing its operating license. Central Bank of Nigeria.

Interestingly, this paved the way for an organized and flourishing banking sector where some banks met the required benchmarks while others merged and some went by the wayside. Nonetheless, this reform created a free flow of capital money to play with the banks – ushering in universal banking. No one will forget the role played by banks in the capital market during the boom era, where investors took loans or applied for margin loan facilities from these banks at 7% to 20% interest rates, to make huge profits on their appreciation. Can go Invested shares. Unfortunately, the proliferation of all kinds of deals in our capital market over time is responsible for the downfall of the economy. It should also be mentioned that Africa was not alone in this economic impasse as most countries in the world including the United States faced the same fate.

To restore the good old days, economic experts and world scholars came up with solutions to revive the economy. Nigeria was not left out in the fight. With the emergence of Mallam Sanusi Lamido Sanusi as the next Governor of the Central Bank of Nigeria, Prof. Charles C. As Soludo’s successor, he swung into action to continue the good works of his predecessor. Between 2009 and 2010, about five bank chiefs were convicted and prosecuted for charges ranging from misappropriation of depositors’ funds to personal misappropriation of funds, unauthorized loans without collateral and wasteful spending. While others are still under trial. After seeing the good works of the new Central Bank of Nigeria governor, the Presidency recently established the Asset Management Corporation of Nigeria. The Asset Management Corporation of Nigeria aims to acquire ‘toxic’ assets of troubled banks and take a majority stake in bankrupt banks after bridging their equity shortfall. Public commentators appreciated the government for this initiative which gradually restored the confidence of investors to invest in both funds and capital markets. No wonder, on 26 April 2011, the prestigious TIME Magazine honored Sanusi Lamido Sanusi as one of the 100 Most Influential People in the World at a grand Time Gala Awards ceremony held in the United States. Although the reforms may seem to prevent excesses of bank operations, the adverse effects are dire as capital and currency markets currently see investor confidence plummeting following yet another buyout of three banks (Afribank, BankPHB and Spring Bank). have been ) by the Sanusi-led Central Bank of Nigeria on August 5, 2011 respectively by three relatively unknown companies (Main Street, Keystone and Enterprise).

However, in early 2011, Mallam Sanusi Lamido Sanusi reopened the implementation of non-interest banking, popularly known as Islamic banking, which was initially introduced by his predecessor to revive the negatively skewed economy. was introduced as a verifiable tool for According to Wikipedia, the World’s Free Encyclopedia, “Interest-free banking appears to be of very recent origin, whereby a working partner receives a higher profit share than a passive (non-working) partner” This simply means that That both the bank and the investor (working partner) will get a higher profit share after a certain business transaction. One would ask, will it create the economic development of the nation as practiced in the United Kingdom, Malaysia, etc.? Certainly, it will build the fortunes of our economy but how we are going about it is technically wrong. Please read Business Day Online June 29, 2011 for further clarification. The CBN governor has the right to talk about the benefits of any product or scheme run by the apex bank, but adding more religious sentiments than professional cum economic benefits, will lead the country to a very rough edge .

This proposed style of banking has generated heated arguments and debates in sections of the country. Remember that Nigeria is a secular state, with roughly equal numbers of Christian and Muslim faithful in the population, not to mention other religious and traditional groups. For example, the leadership of the Christian Association of Nigeria (CAN) has strongly opposed the implementation of Islamic banking, citing some wrong approaches by the Sanusi-led Central Bank of Nigeria, as the state to promote the implementation of the plan. The funds have not been utilised. support of other religious groups in the country. The country still faces grave security threats posed by kidnapping, insurgency and, most worryingly, terrorist attacks by dangerous sects, boko haram Especially in the Federal Capital (Abuja) and other northern parts of the country. It is surprising to know that the Presidency is silent on this matter which needs immediate intervention to set the facts straight as the public wants better governance in terms of economic and socio-political gains.

Whatever be the outcome of the Islamic banking proposed by the Central Bank of Nigeria, the apex body should kindly consider the following points:

1. That the implementation process of Non-Interest (Islamic) Banking should be carried out in strict adherence to the laid down procedures of the Regulatory Authority – Central Bank of Nigeria.
2. That there should be higher returns for the investors of Islamic banking without affecting directly or indirectly the interest of other investors of banking in the same sector.
3. The Central Bank of Nigeria should please continue to create greater public awareness about Non-Interest (Islamic) Banking by holding a roundtable discussion with all stakeholders which include: Religious sects, economic experts, law makers, government officials and media to dispel any misconception about the proposed scheme.

The fact that non-interest (Islamic) banking with its’ many economic benefits has been practiced by some countries in the world, the Central Bank of Nigeria under its current leadership has enlightened 55% of Nigerians on its benefits without negative has been assured. Influencing other interested parties for economic development and peace.

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected


Latest Articles