culled from Nigeria revolt
After months of controversy generated by the introduction of the non-interest banking in the country, also known as Islamic banking, Jaiz Bank Plc quietly opened its doors for business on Friday, January 6, 2011 in Abuja, the Federal Capital Territory (FCT).
The bank, which has its head office in Kano House, Central Business District, Abuja, has been offering banking services for about a month, ditto its branches in Kaduna and Kano which were also opened simultaneously.
The commencement of interest-free banking business has obviously ended months of speculation and suspense associated with the birth of a new form of banking in the country. Indeed, the controversy surrounding interest-free banking may have caused Jaiz Bank to open without the usual pomp and ceremony associated with conventional banking marketing gimmicks, to herald commencement of business.
Jaiz’s eventual emergence follows repeated failures in the past to begin operations more than five years after it launched itself into the public consciousness to raise funds from the capital market. The bank, which has as one of its promoters a former chairman of First Bank of Nigeria Plc, Alhaji Umaru Mutallab, was actually incorporated on April 1, 2003 as a public limited liability company with an authorised share capital of N2.5 billion.
The Central Bank of Nigeria (CBN) eventually announced on June 20, 2011 that it had issued Jaiz Bank an approval-in-principle to operate as an Islamic bank – the first financial institution to be so licensed. It was thereafter, given six months to comply with the apex bank’s capitalisation requirement, among other criteria, in order to receive the final licence.
But much furore arose from the introduction of Islamic banking last year when the CBN Governor, Sanusi Lamido Sanusi, lent his support to the project, arguing that it was no different from conventional banking, with the non-interest banking service as a product niche. Controversy, however, was stirred when he said banks that offer such products would have to adhere to the tenets of Islamic commercial jurisprudence and must have a Sharia Advisory Committee
Source, however, learnt that Jaiz Bank may have hastily commenced business under pressure and may not have been fully prepared to market its presence in the Nigerian economy. This, it was gathered, has impacted on the bank, resulting in the low patronage in its Abuja banking hall which was unusually quiet when source visited Wednesday.
When this source visited the bank’s head office which also houses its Abuja branch, there were only two banking product offerings: the corporate account and individual current account while other offerings such as internet banking and saving accounts, among others were said to be on hold for now.
Sources at the bank said it intends to also operate the children’s account, fixed deposit account as well as offer a range of services including internet banking and ATMs among others.
The CBN’s decision to introduce Islamic banking in the country had been greeted with criticisms from members of the public, especially Christian leaders who suspect that it was a ploy to Islamise the country.
Amidst the heated debate, some persons had suggested that the word “Islamic” be replaced with a more receptive phrase such as “non-interest” banking in order to douse the anxiety of those who were uncomfortable with it.
Our source checks further revealed the CBN has also encouraged the amendment in the nomenclature for Islamic banking by using the phrase, “non-interest banking” more often. But a marketer with the bank, who would not want to be named said: “Whether you call it non-interest or Islamic banking, the fact still remains that the principles cannot be changed because our model is firmly rooted in Islamic principles.”
But there are yet other hurdles to cross for Jaiz and other non-interest banks to follow suit. The source added that Jaiz is at the moment running skeletal services because it still needs to get some approvals from the CBN before it can proceed full steam ahead.
The source further explained that a good number of Nigerians were yet to fully comprehend the basic principles of the institution, adding that some still see the bank as strictly an Islamic affair.
According to him, the bank would not be interested in investing in start up businesses and would also shun “unethical” ventures such as prostitution, beer-selling business, gambling, and cigarette manufacturers, among others.
Although Managing Director/Chief Executive Officer of the bank, Alhaji Mustapha Bintube, could not be reached for comments, the source said the bank’s operations would be consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics which prohibits fixed or floating payment or acceptance of specific interest (usury) or fees for loans.
The source also admitted that further public enlightenment would be needed to create awareness so Nigerians could take advantage of interest-free services to actualise their target economic objectives.
- Islamic banking: I would have sacked Lamido – Falae (vanguardngr.com)
- Sanusi Lamido, CBN Governor Defends, Narrates history of Islamic Banking in Nigeria – Audio (ogala.wordpress.com)
- India weighing the concept of Islamic Banking (nidhisingh025.wordpress.com)