The Central Bank of Nigeria [CBN], has given Stanbic IBTC bank [a unit of Standard Bank Group Ltd] a license to operate Islamic banking services in Nigeria.

This revelation was given by the Deputy Governor of the apex bank Kingsley Moghalu on Sunday.

A preliminary license was awarded to Stanbic last week for a Shariah-compliant banking window, the first one given to a commercial bank in Nigeria, Moghalu said in an interview in South Africa�s capital, Pretoria, on July 1. Islam bans paying and receiving interest.

Central bank Governor Lamido Sanusi said on June 20 Nigeria wants to be a �hub of Islamic finance" in the region and plans to sell its first Islamic bond, known as sukuk, within 18 months.

�We know a number of other banks are interested in applying for non-interest banking windows," Moghalu said. �We are preparing our officials to be able to regulate that space, and a lot of training is taking place in that context."

The CBN has already given approval to Jaiz International Bank Plc, a local lender with international investors, to open the country�s first Shariah-compliant bank, Moghalu said.
Stanbic has a license to begin operating Islamic banking branches within six months and if it fails to do so within that time, the lender will need to reapply for approval, he said.

According to Moghalu, Islamic banking �has significant potential but it�s subject to the risks that go with every other type of banking activity."

The introduction of non-interest banking in Nigeria, thereby known as Islamic banking, has been trailed by wide range anger and disagreement by religious groups in the country.
�The President of the Christian Association of Nigeria had said last week that the CBN has introduced religion into the Nigerian banking sector and condemns the introduction of Islamic banking in Nigeria.

In a swift reaction to the rejection of non-interest banking in the country by religious groups, Islamic leaders said Islamic banking has become a global phenomenon.

"It has been adopted in more than 75 Countries across the World. Some of these are Christian States or with predominantly Christian population such as United States, United Kingdom, Germany and France. In Asia, many Countries, including Indonesia, India, Pakistan, Bangladesh and Malaysia are operating the Islamic Banking System. In Africa, such countries like South Africa, Egypt, Senegal, The Gambia, Niger, Kenya, Tanzania, Algeria, Libya, Tunisia and Benin Republic have also embraced Islamic Banking". The Nigerian Supreme Council for Islamic Affairs (NSCIA) said in its statement.


http://www.channelstv.com/global/news_details.php?nid=27719&cat=Business

Wise one ibtc. I think all these anti-islamic banking critiques are agents of dis our conventional banks, knowing dat d alhajis & common muslim man will close his account with them in order to acquire an islamic account. But never d less, d floor is now open to all 4 competition. Go and get ur licence to start islamic banking

Holier than thou- d westerners introduced d religion to us and they are always realistic my people are close minded PASTORS DEY CHOP FOLLOWERS DEY FAMISH IN IGNORANCE

And so it begins!!

Look, you can not deny Muslims their rights to have an Allah approved finance system; you are better off feeding them pork.

My only concern is, who pay the interest? Who services the banks?

Since it is a financing product just like it is practiced in other non Islamic state, Banks will use the interest they get from non sharia complaint borrowers to maintain the bank.

This is my concern and what other ppl Xtians or Muslims need to debate not drive the ride down paranoia ave!!


You are discriminating and dividing the economy sanusi

PS; i'm not a Muslim or xTIAN

Not surprised at StanbicIBTC quickly grabbing the window. If I was asked to predict, I would have predicted stanbic, and maybe GT, as banks to quickly adopt. I'm sure Stanbic would have adopted it if the regulatory framework had existed years ago. They pioneered ethical investment in Nigeria far back 1997 or so) and their ethical fund is one of the leadiing and earliest in Nigeria. I have never doubted ANAP's business sense. I see GTB also following suit soon.

As for the bail-out question, Islamic banking is not for Muslims only. Also note that Muslims also pay tax. But more importantly, Islamic banking is more of an alternative banking option than religious, even though derived from religious principle. If not so, Islamic Finance will not be treated as part of Economics, rather than religious study, in wstern economic discourses/schools. Islamic banking has trascended religion, it's Islam's gift to economics. We should look beyond religion in Nigeria too.

Jarus:

Not surprised at StanbicIBTC quickly grabbing the window. If I was asked to predict, I would have predicted stanbic, and maybe GT, as banks to quickly adopt. I'm sure Stanbic would have adopted it if the regulatory framework had existed years ago. They pioneered ethical investment in Nigeria far back 1997 or so) and their ethical fund is one of the leadiing and earliest in Nigeria. I have never doubted ANAP's business sense. I see GTB also following suit soon.

As for the bail-out question, Islamic banking is not for Muslims only. Also note that Muslims also pay tax. But more importantly, Islamic banking is more of an alternative banking option than religious, even though derived from religious principle. If not so, Islamic Finance will not be treated as part of Economics, rather than religious study, in wstern economic discourses/schools. Islamic banking has trascended religion, it's Islam's gift to economics. We should look beyond religion in Nigeria too.

Jarus but we have the case of Sharia compliance, is it for loaners only or for both parties?

Olumide: Check the CBN guidance it has nothing to do with Sharia Compliance.

I am not surprised that  Stanbic IBTC is leading the pack, South Africa has very strong and educated Muslim community and they have vibrant Islamic banks. I remember also seeing the Standard Bank in Doha, so they have experience.


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CBN Issues New Guidelines for Non-Interest Banking
The Central Bank of Nigeria (CBN) has issued new guidelines for the operation of Non-interest banking in Nigeria. 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 include other form of non-interest banking not based on Islamic principle. 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.
[b]Another significant review is the removal of any reference to Sharia Council which has been changed to Advisory Council of Experts whose responsibility is to advise the CBN on the appropriateness of relevant financial products to be offered by the institutions.[/b]For the avoidance of doubt, section 23 (1) and section 66 of the BOFIA 1991, (as amended) explicitly provide for the licensing of Non-Interest Banks (NIBs). The CBN is obliged, by law, to issue licenses to appropriate entities for the establishment of NIBs provided they meet the regulatory requirements for licenses.[/b]In view of this, the CBN is open to receiving and evaluating applications for licensing of non-interest banking institutions based on other principles rather than the Islamic variant and will soon issue separate guidelines for non-interest banking under other principles.
Signed
M. M. Abdullahi
Head, Corporate Communication
21st June, 2011

Remii:

Olumide: Check the CBN guidance it has nothing to do with Sharia Compliance.

I am not surprised that  Stanbic IBTC is leading the pack, South Africa has very strong and educated Muslim community and they have vibrant Islamic bank. I remember also seeing the Standard Bank in Doha, so they have experience.


-----------------------------------------------------------------------------------------------------------------------------------------------------------
CBN Issues New Guidelines for Non-Interest Banking
The Central Bank of Nigeria (CBN) has issued new guidelines for the operation of Non-interest banking in Nigeria. 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 include other form of non-interest banking not based on Islamic principle. 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.
[b]Another significant review is the removal of any reference to Sharia Council which has been changed to Advisory Council of Experts whose responsibility is to advise the CBN on the appropriateness of relevant financial products to be offered by the institutions.[/b]For the avoidance of doubt, section 23 (1) and section 66 of the BOFIA 1991, (as amended) explicitly provide for the licensing of Non-Interest Banks (NIBs). The CBN is obliged, by law, to issue licenses to appropriate entities for the establishment of NIBs provided they meet the regulatory requirements for licenses.[/b]In view of this, the CBN is open to receiving and evaluating applications for licensing of non-interest banking institutions based on other principles rather than the Islamic variant and will soon issue separate guidelines for non-interest banking under other principles.
Signed
M. M. Abdullahi
Head, Corporate Communication
21st June, 2011

Now we are talking!! So if I want to invest in security dog biz, I can borrow money from an islamic bank right?

Also, if you understand the Sharia compliance, kindly explain. does it mean those who want to invest in a brand of say beer, can borrow from a sharia compliant loaner?

By Shari-compliant, I hope you are not thinking it means the loan parties adopting Islamic way of life or subjecting to Islamic punishment system, because that is what many people think of when they hear sharia.

By Sharia-compliant transaction is meant there will be no interest on the loan, both the loan giver and taker will agree on what purpose the loan is to be used for and how profit or loss on the use of that loan will be shared by both parties. Of course, if you want to invest the money in alcohol or gambling, Islamic banking is not where you go. That is the Sharia-compliance. It doesn't go beyond there. If you like, drink alcohol in your private life, it's none of the bank's business. Defaulting doesn't also mean you will be subject to Sharia legal system.

There is also the. Non-Islamic non-interest window, to be offered by Non-Islamic banks, in which case the issue of alcohol and other Sharially unethical investments can be waived, and absence of interest will be the only similarity with the Islamic model.

Kai, Ibtc smart o. They are looking for awooff money to do biz without paying interest. This bank must be headed by a sharp guy from Warri. A-r-e-a. Warri man no dey carry last jare.

Jarus:

By Shari-compliant, I hope you are not thinking it means the loan parties adopting Islamic way of life or subjecting to Islamic punishment system, because that is what many people think of when they hear sharia.

By Sharia-compliant transaction is meant there will be no interest on the loan, both the loan giver and taker will agree on what purpose the loan is to be used for and how profit or loss on the use of that loan will be shared by both parties. Of course, if you want to invest the money in alcohol or gambling, Islamic banking is not where you go. That is the Sharia-compliance. It doesn't go beyond there. If you like, drink alcohol in your private life, it's none of the bank's business. Defaulting doesn't also mean you will be subject to Sharia legal system.

There is also the. Non-Islamic non-interest window, to be offered by Non-Islamic banks, in which case the issue of alcohol and other Sharially unethical investments can be waived, and absence of interest will be the only similarity with the Islamic model.

Yup that is my exact concern and worry!!! But if that is not the case, this will be good home owners and biznesses in every possible way,  It's a win situation,

Can I get loan for house or is it for biznesses alone?


So is it that the islamic one is strict with Sharia and the non islamic one isn't or what exactly,  If the Islamic ones isn't for those willing to invest in non sharia allowed investments then we still have a problem of discrimination.

0lumide:

Yup that is my exact concern and worry!!! But if that is not the case, this will be good home owners and biznesses in every possible way,  It's a win situation,

Can I get loan for house or is it for biznesses alone?


So is it that the islamic one is strict with Sharia and the non islamic one isn't or what exactly,  If the Islamic ones isn't for those willing to invest in non sharia allowed investments then[b] we still have a problem of discrimination.[/b]

my brother be realistic, no disriminations, even now there are banks who will tell you outright that they dont service LPO from certain institutions or dont fund some kind of business due to thier risk taken ethics. You cannot force someone to borrow you money and vise versa.

You may be able to borrow for housing but he gets as dem they do am, its still contributory.

Remii:

my brother be realistic, no disriminations, even now there are banks who will tell you ourright that they dont service LPO from cirtain institutions or dont fund some kind of business due to thier risk taken ethics. You cannot force someone to borrow you money and vise versa.

True about banks but those ethics are void of discrimination you know. As long as religious affiliation is not a problem, interest free banking is cool!

Mine is that I don't want to see any Muslim dress like the Arabs in Asia into the bank. 

Hence will be scared of Boko Harams.

The banks you owned abi?

^^ Not necessary.

Example below anyways.

@Jarus, thanks for the educative write up. You have allayed so many Nairalanders fear on the so called Islamic banking.

Think of it, if Islamic Banking is dat discriminatory, why will countries like USA, UK and even Switzerland allow it to be operated on their lands? Or why will western banks like HSBC, Citigroup and even JP Morgan be offering Islamic Banking Services?

It's high time Nigerians looked beyond religion and take advantage of this laudable act by CBN.

Some years back, Universal Banking was the rave.

Today, and with sanusi at the helm of affairs, UB is history as banks have been asked to divest.

Now CBN is building world class hotel and soon would build and operate chicken poultry,(whatever okuku farming have to do with macro economic policies, price stability and Forex mgt).

4/5yrs from today when sanusi is no longer in cbn, what happens to islamic banking?

Assuming the next cbn governor reverts to status quo- i.e no islamic/free interest banking, and with the high rate of volatility and insecurity,and dare devil responses by boko faithfuls,will Nigeria be better for it

People don't just see the excuses! Before Sharia was introduced to the North we heard it was practiced in places like Parkistan, Saudi Arabia, Indonesia, etc that it help to curb crimes and make the society better. It was even said Sharia will only have effect on the Muslims North and at the end it led to Boko Haram and the Killing of our innocent Youth corps and citizens.

There is no argument that because Islamic Banking has branches in secured countries with better regulation that it have the same effect in Nigeria. Nigeria of all country is more religious than I ever thought. Imaging killing you fellow country men for a terrorist attach incidence that happened in a far away nation like the USA.

Keep deceiving yourself, this a ploy to deploy money to the Boko Haram group. We will soon find out how this banking system going to progress in fueling those terror acts. Look, how do you think most of those acts carried out in the world are financed? Do you think this group are not smart? They will bride the people and have their way - there is always a blacksheep  in every sector. And, if you scrutinized very well those Islamic Banks branches all over the world have hands in what is happening in sponsoring those attach. No body is that blind. Those develop countries sometimes know what will transpire of the system yet they allow things like that to happen. Even in USA there are home grown terror and some of them are funded by this bank. Security is somehow overlooked in this country by leaving out some loopholes.

I hope Nigerians will open their eyes to this cataclysmic problems that will bedevil the country with time to come. Nigeria is becoming a disturbing issue not just a disturbing nation. Bet you the whole thing will soon unfurl the reality of why now the such banking system is needed in a nation like Nigeria.

I don't care what Saudi Arabia and their co-horts are trying to instigate into the country. They have been trying all means possible to label this country as an Islamic nation for long. Can't we just stop for once to address why are these Northerners always seeing the Southerners as enemy? Can't we figure out why a nation as secular as Nigeria right of the people are not respected according to the constitution? How many Northerners are killed in South for attacks in other developed nations?


These still boild down to reason why this country will remain blinded to the truth and why we are still look down upon in the world. The Northerners always use the corrupt South  and pretend to seemed holistic in their approach to everything in Nigeria yet they have some of the most corrupt and wicked leadership that has ever happened in the country. Take a look at Abacha, Babangida, Buhari,etc they were animals in uniforms. I thought there is nothing like armed robbers in the North not until some friends of mine were attack there. Stop pretending like the South preachers and Imams are as crafty as the pastors.


To conclude this, there is no way this Islamic Banking is going to be friend of what will transpire of the North with its Boko Haram. A situation where some of the leaders are apologizing to the group is appalling and absurd. Nigeria can't just stop amazing me.

Whoever have the resources should use it to better the Nigerian masses. If Jonathan can allow the importation of any kind of tooth pick, why no to Islamic bank?

@all4naija
Pure Ignorant

@ Jarus

Will they require collateral like the Non-Islamic bank?

@all4naija, i would have honestly love to answer you, but on a second thought your "levels" displayed here left me no choice but to conclude you are "too much"

cvibe:

@ Jarus

Will they require collateral like the Non-Islamic bank?

no collateral needed in islamic banks!

hasyak:

no collateral needed in islamic banks!

I am not sure of that part of no collateral, but there must be a way to guarantee that you won't abscond with their money. The concept of non-interest banking is that of partnership, the bank has got the money, you have got the idea and the expertise. Both of you come to an agreement, of how to split profits and losses too. The bank can also lend you some of their expertise to help your business plan work.

So the great thing about it is that, your debt will never suddenly increase because of change in interest rates, nor will you become stranded because business has failed to pick up as fast as it should. At good times you and the bank grow stronger and stronger. As for mortgage or taking a loan to buy a car for instance, the bank will purchase the car for you and sell to you at a fixed price, which are so suppose to pay over some stipulated time (not completely sure how it works entirely though). It sounds like the same interest right? but if you have ever taken a loan before, then you will understand that when paying back the loan interest can increase(never seen it drop before), and the bank always come up with all sort of charges. It is just a new banking system

IBTC must be boycotted! Or they will bear the consequence of being labeled as extremists bank!

I see Muslims coming to Sanusi's aid !!!

Yet they claim Islamic Banking is for all.

I will fold my hands watch how it goes.

In-fact let them have their Islamic Banking.

We shall live to see the results of their actions.

OK let terrorism funding begin,

This is perhaps the most educative post on Nairaland. BTW, the management team at STANBIC/IBTC is headed predominantly by Yorubas, and most of them are Christians, indeed, some are top officials (ex. Pastors) of diverse Churches. Goes to show that Yorubas don't really care about all the "religious" noise across Nigeria. To them, business is business. Others should learn that and we all will be better for it. But then again, there are those whose business is religion. They are the loudest noisemakers. In this context it is understandable, but nonetheless confusing.

In fact, Sola David Borha and Yinka Sanni (MD and DMD respectively of Stanbic) are Pastors. These are people thatcan identify the opportunity.

[b][/b][color=#990000][/color] CONGRATS TO STANBIC/IBTC and d Nigerian masses on dis landmark! We've waited for dis since 2004 when Prof. Soludo aprovd Intrest-free banking. N25bilion Capitalisation was set back. Kudos to Soludo for starting it & to Sanusi & his team for actualising it.

To JARUS, JAIZTECH & co, thank for the beatiful work of enlightening people on this page! I know our CHRISTIAN FELLOWS & OTHER CRITICS DO NOT HATE INTEREST-FREE BANKING because THE HOLY BIBLE ALSO CONDEMNS INTERESTS, WHAT DEY DETEST IS ISLAM OR ISLAMIC ATTACHED TO IT! Dis was d pronouncement of CAN recently!

We shuld not throw away d baby wth bad water. INTEREST-FREE Banking is good for all & sundry & I know NIgeria & Nigerians would NEVA REGRET dis step in RIGHT direction.

Kill this economy once and for all with religion.

It will never work here !

We cant fold our hands and see you starve to death.

Stanbic IBTC beware of what you are to start, because boko may be understatement