Nothing illegal about Islamic banking, Sanusi insists

Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, insists the controversy that has continued to trail the proposed introduction of Islamic banking in the country was unnecessary, as the apex banking is doing nothing that is illegal.



Mr Sanusi, who was answering reporters' questions in Abuja, said Islamic banking has nothing to do with promoting religion or any belief, but another financial product or on-interest banking designed to diversify and broaden the scope of banking service to customers.
"There is nothing called Sharia banking. There is non-interest banking or Islamic banking, which is a financial product all over the world. This is the only country in the world that I know that Islamic banking is being seen as a religious issue. But this view is being held by the minority. There is nothing illegal about it. The BOFIA (Banks and Other Financial Institutions Act) law was amended specifically to allow for it," he said.
The governor was reacting to allegations that a section of the banking industry are against the proposed policy on grounds that it is illegal, as it not only violates the provisions of the law requiring those interested in establishing such a bank to be Sharia compliant, but also undermines the secular nature of the country.
No complicity
Tracing the history of the policy to the administration of his predecessor, Chukwuma Soludo, in March 2009, Mr Sanusi exonerated himself of any complicity to Islamise the country's banking system through the policy, arguing that if there was any plan to do so, he should not be held responsible, as he merely inherited it.
"The circular requiring anyone interested in setting up an Islamic Bank was first issued in March 2009, by the present deputy governor, Tunde Lemo, a reverend; and the (CBN) governor then was called Professor Charles Chukwuma Soludo.
" At the time I became governor, that circular was already out there collating inputs from the general public, and was finally put together by the director, financial policy and regulation, whose name is Christian Chukwu. So, if there is a grand process for Islamisation of the banking sector, then it started with Professor Charles Soludo, Reverend Tunde Lemo, and Mr Christian Chukwu.
"Islamic banking is a financial product. If one goes to England, one would see the Islamic Bank of Britain out there on the streets. Citi Bank, Standard Chartered and HSBC all sell Islamic Banking. HSBC even has an Islamic banking called Amana. It is a product all over the world. South Africa has Islamic Bank," Mr Sanusi further said.
According to the governor, the section in BOFIA that people misunderstand has to do with the requirement for a written approval of the CBN governor for anyone interested in setting up one's bank using Islam or Sharia in the bank's name, pointing out that the CBN has no doubt that it is doing the right thing, as it is "diversifying the economy and broadening the reach of product offering to customers in the country."
Since the announcement of the proposal, critics have continued to condemn it, claiming the introduction of the policy is not only unconstitutional and capable of causing religious acrimony in the country, but also potentially harmful to the country's economy.
Legislative backing
One of such critics, who is the group managing director, Pharez Nigeria Limited, Eghes Eyieyien, recently said "it is rather inauspicious and even insensitive for the CBN to deem the introduction of Shariah banking a priority at this time, especially when the constitutional and legislative footing for it is non-existent."
According to Mr Eyieyien, "Nigeria does not have to implement the model of non-Interest banking being practised in Islamic countries and by Muslims in the West," pointing out that the CBN should rather apply itself innovatively to develop the business and enact regulations and prudential guidelines that are not religion-specific.
He described Islamic banking in Nigeria as a worrisome development since BOFIA 1991 (as amended) has already made provisions for non-interest banking in the country, and not as "Shariah-compliant" banking.
He said there is no provision in the BOFIA that approves Sharia banking, as it stipulates that: "Except with the written consent of the Governor (a) no bank shall, as from the commencement of this Decree, be registered or incorporated with a name, which includes the words "Central" "Federal," "Federation," "National", "Nigeria", "Reserve", "State", Christian", "Islamic", "Moslem", "Quaranic", "Biblical".


Back