CBN identifies odds against Islamic banking

DESPITE the modest progress made in the institutionalisation of non-interest banking in the country, the Central Bank of Nigeria (CBN) has disclosed that the absence of Islamic insurance to protect investments of  such  banks against unforeseen hazards could impair the growth of the Islamic banking industry.

CBN Governor, Lamido Sanusi

Governor of the apex bank, Mallam Sanusi Lamido Sanusi, delivering a keynote  address, on Wednesday   in Yola, the Adamawa State capital, at the 16th CBN seminar for Finance Correspondents and Business Editors,  listed the odds against the new banking model to include limited knowledge of accounting and auditing standards pertinent to Islamic financial institutions.

Other odds identified by the CBN were a dearth of knowledge, skills and technical capacity to regulate and supervise non-interest banks, lack of Sharia-compliant liquidity management instruments,  the absence of which permits the investment of excess liquidity in interest bearing instruments and lack of robust comprehensive legal guidelines, especially at the level of conflict adjudication involving Islamic financial contracts, products or entities.
The challenges in the initiation and implementation of  non-interest banking notwithstanding, the apex bank said it had not rested on its oars in embarking on  a learning process towards developing a robust regulatory guideline that meets international standards.
In 2008, Mallam Sanusi, who was represented at the event by a CBN board member, Mallam Dairu Mohammed, said  some key officers of the apex bank undertook a study tour of Bank Negara, Malaysia, with a view to understudying the Malaysian Islamic banking model and  its regulatory and operating practices.

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