Is non-interest banking a ‘wise banking’ option for economic growth?
Let’s remove our minds from whether non-interest banking or the Sharia of it component is constitutional or not. Those in the legal profession are qualified to tackle that aspect. But the question on the lips of many is if it will be a more prudent way to banking, and more importantly, the beginning of better relationship between firms in the economy and banks.
The argument in some quarters is that the banking crisis that almost crippled the economy did not emanate from banks that have religious inclination, but was as a result of banks with little or no interest about the firms they were lending to.
According to analysts, banks will be more prudent when they know that their ability to continue in business depends on the success of the firms they give loans to. Their thinking is that the issue of non-performing loans will be a lot less, since the chief executive or any executive director will not grant loans on the basis of closeness, but on professional level.
The implication is that firms which do business with non-interest banks will grow, and more people will be employed, thus will also impact positively on the nation’s economy. This perhaps explains the opposition by the group – Apostles in the Market Place. If the former guidelines are anything to go by, the thinking of the apostles may be that the benefits on non-interest banking, which will bring about growth in businesses, and thus increase employment, may only benefit Moslems, leaving Christians losing out of the benefits of the new banking model under the specialised banking department.
Richard Ikiebe, senior fellow with the Pan-African University, who is a member of the Apostles in the Market Place, a platform for change agent, earlier noted that what they are calling for is not about religion, war or any fight for that matter, but standing up against injustice.
John Okolo, an analyst based in Lagos, told BusinessDay that if religion is shut out of the matter, this can be the beginning of new things happening to the nation’s economy.
According to him, so long there are no religious undertones in the central bank’s decision; proper retail banking is just about to start.
Kingsley Moghalu, CBN deputy governor said, when more people embrace banking, it will be easier for Nigeria to be among the top 20 nations by 2020. He said the apex bank has been developing concepts that will grow banking population in the country.
According to him, when the central bank came out with the concept of international banking, national banking and regional banking (under the commercial banks category), the purpose was to ensure those at the grass roots have access to banking services through regional banks.
Again, under the specialised banking model, Moghalu explained that the introduction of micro finance banks was another attempt to ensure more Nigerians embrace the banking system. In a bid to make the non-interest banking more inclusive, the central bank issued a new guideline to cater for non-Muslims.
“The new guidelines are the outcome of the review of the earlier guidelines issued, based on the recommendations of various stakeholders. The new guidelines clarify the contextual definition of non-interest banking, which is not restricted to Islamic banking, but also includes other form of non-interest banking not based on Islamic principle,” it said.
According to a statement signed by Mohammed Abdullahi, CBN spokesman, “This is in accordance with the provisions of Banks and Other Financial Institutions Act (BOFIA), which clearly provide for the two variants of non-interest banking. This ensures that discrimination on any grounds in the participation by individuals or institutions as promoters, depositors or other relevant parties in any transaction regarding a non-interest financial institutions, whether based on Islamic or other model, is strictly prohibited.”
