There are questions that Sanusi should be answering that nobody is asking.

Question like, what will be the minimum capital base of non-interest banks?

Since their loans & savings are without interest, how will they pay for the facilities, properties, infastructures, rates and salaries of staff employed in course of thier business? who will be the financiers of this banks and what is in it for them?

Since interest is not involve in their operation are they exempted from paying tax?

How will generate more funds to keep their operations afloat? what are steps they use in recovering loans given out?

please educate those of us that practise other faiths so that we can erase all forms of suspicion from our minds.

good question how I wish u guys settle down and ask questions rather than the daily sentimental jargons.spewed on this forum. the answers for those quetion are exqctly the reasons framework of operation of nib are beendeveloped go to cbnwebsitw and download the guidelines and read u willfind answers to all this

I thought most of the existing banks are the onees that have signed up to run the Islamic bank thing.
Stanbic IBTC, UBA and co, do they have to start looking for another Minimum Capital base?

I dont think they do. but for banks operating as full fledged islamic bank there is a min cap, just like the case of jaiz bank

bamosagie:

There are questions that Sanusi should be answering that nobody is asking.

Question like, what will be the minimum capital base of non-interest banks?
since their loans & savings are without interest, how will they pay for the facilities, properties, infastructures, rates and salaries of staff employed in course of thier business? who will be the financiers of this banks and what is in it for them?
since interest is not involve in their operation are they exempted from paying tax?
how will generate more funds to keep their operations afloat? what are steps they use in recorvering loans giving out?
please educate those of us that practise other faiths so that we can erase all forms of suspicion from our minds.

Those are the only questions for the CBN. The rest are simply the business of the operators, if their business model fails, it is there problem.

Don't forget that there are non-interest banks and Islamic banks, and they have different guidelines.

I watched Mallam Sanusi on Sahara Tv Saturday 30th July 2011, He explained the modus operandi of the Bank and said he never initiated the move, rather it was muted by Soludo. I think the only problem is the name that makes the idea inflamable in Secular State like Nigeria. Lets change the name and see how it goes

You VISIT CBN website for detail SINCE is your concern. This issue is over discussed PLEASE!!

There's nothing like free banking.

Please stop deceiving yourself and ask relevant questions about how he intends to run this bias bank system.

Let me give you an example:

You want to get a car cash for 1,000,000 Naira cash from the seller, and you don't have such money.

The Islamic bank comes in and tells you that you can take the car. They pay for it on your behalf.

The costs to you from the Islamic bank comes to 3,000,000 Naira to be paid over specified period of time.

Now, tell me who is deceiving who.

Just another useless religious bigotry that often time divide this country; who needs this bank anyways.

Islamic Banking?

You obviously missed many discussions on NL about this form of banking.

To summarize the so-called non-interest banking (Islamic or Non-Islamic) is nothing such - the interest simply goes by another name.

See the very first couple of posts on this topic: Islamic Finance - Ijara. It will dawn on you that the "interest" simply goes by another name (profit rate being the most common), and hence all the rules of banking ought to apply - except Nigeria's case my be different given the approach being taken by Mr. Sanusi.

bamosagie:

There are questions that Sanusi should be answering that nobody is asking.

Question like, what will be the minimum capital base of non-interest banks?

Since their loans & savings are without interest, how will they pay for the facilities, properties, infastructures, rates and salaries of staff employed in course of thier business? who will be the financiers of this banks and what is in it for them?

[size=14pt]Since interest is not involve in their operation are they exempted from paying tax?[/[/size]b]
How will generate more funds to keep their operations afloat? what are steps they use in recovering loans given out?

[b]please educate those of us that practise other faiths so that we can erase all forms of suspicion from our minds.

bamosagie:

There are questions that Sanusi should be answering that nobody is asking.

Question like, what will be the minimum capital base of non-interest banks?

Since their loans & savings are without interest, how will they pay for the facilities, properties, infastructures, rates and salaries of staff employed in course of thier business? who will be the financiers of this banks and what is in it for them?

Since interest is not involve in their operation are they exempted from paying tax?

How will generate more funds to keep their operations afloat? what are steps they use in recovering loans given out?

please educate those of us that practise other faiths so that we can erase all forms of suspicion from our minds.

good questions and to cut the long story shot, this is the question we should be asking and also answer it with how it works.

QUESTION : DO THE ISLAMIC BANKING CHARGE INTEREST? YES OR NO

ANSWER : YES

EXPLAIN : i thought under the islamic banking system, when the islamic bank lends you money,you don`t have to pay interest but now i`m hearing that the condition is that you must tell them what you want to use the money for and it must also agree with islamic business,meaning you cannot open beer joint but the one that agrees with islamic law and they will supervise and share the profit and loss with you,meaning they will not give u money if they know that the business will not earn profit so my questions is what is the difference b/w profit and interest. let me break it down, PROFIT is that additional income(money) made by selling your goods and services above the purchase price to what is now know as market price while INTEREST is a fee paid by a borrower of assets (MONEY=current asset)to the owner as a form of compensation for the use of the assets.now the borrower borrows money from islamic bank and makes profit and shares the profit the islamic bank, to the borrower is a profit why to the islamic bank it is an interest as long as their money will return back to them so you see why the igbo guy are already investing in it. so i still stand my stand islamic bank do collect interest.

What good is the Islamic banking if they cannot support my alcohol drinking business, mstcheww

ncpat:

good questions and to cut the long story shot, this is the question we should be asking and also answer it with how it works.

QUESTION : DO THE ISLAMIC BANKING CHARGE INTEREST? YES OR NO

ANSWER : YES

EXPLAIN : i thought under the islamic banking system, when the islamic bank lends you money,you don`t have to pay interest but now i`m hearing that the condition is that you must tell them what you want to use the money for and it must also agree with islamic business,meaning you cannot open beer joint but the one that agrees with islamic law and they will supervise and share the profit and loss with you,meaning they will not give u money if they know that the business will not earn profit so my questions is what is the difference b/w profit and interest. let me break it down, PROFIT is that additional income(money) made by selling your goods and services above the purchase price to what is now know as market price while INTEREST is a fee paid by a borrower of assets (MONEY=current asset)to the owner as a form of compensation for the use of the assets.now the borrower borrows money from islamic bank and makes profit and shares the profit the islamic bank, to the borrower is a profit why to the islamic bank it is an interest as long as their money will return back to them so you see why the igbo guy are already investing in it. so i still stand my stand islamic bank do collect interest.

Let me make a clarification between the two, maybe this will help your understanding of the different between the profit and interest, at least from Muslim point of view. Money is not a commodity, meaning, we cannot buy and sell or lease money, interest in reality is buying and selling of money. The “profit” that comes out from this “transaction” is called interest.

Any other forms of increase in return (excluding those that came from forbidden transactions) is what is call profit in Islam. Or to take it further, profit is the residual return to the entrepreneur after all the factor of productions is paid their respective shares.

According to some scholars, they said interest drive economy is dangerous, it destroys the economy, instead of investing your money in real commodities/business and risk a loss, you might as well sit on your money, lend it and enjoy the “fixed returns”; no companies or jobs were created. It did add something to the economy, but the reality is that it destroys more than it creates.

Profit comes from the production of real goods/services and added real value to the economy.

1. Why did you want to build world class hotel with CBN money? Because I think Islamic banking is against such thing!

2. Mr. Sanusi, are you a businessman?


More questions to follow later.

Sure there is always the danger of the interest form of banking going haywire, but the same is true of non-interest banking.

The issue in both cases is that you must not enlarge the scope beyond the means of meeting the information needs to keep the system honest. Between the two form of banking the interest approach is most capable of handling the kind of large scale transactions now common in the modern world. It does this by reducing the richer set of information needed to run non-interest banks.

For a non-interest bank to work the lender must be involved in the loan takers business closely. This need is essentially what would keep non-interest banking at the community banking level, where such information can be easily collected. It partly explains the reason why they are not doing too well in nations where it is religiously-driven and not adapted (see below to modern needs) Non-interest banking, particularly the Islamic variant that also decides the type of business the loan-taker may engage in, cannot finance projects with no obvious end use, that would not begin earning profit for a long time (the bank will go under), or of uncertain profits. For example, can I borrow from an Islamic Bank branch in Kaduna to finance my project in Lagos? Unless the bank closely monitors that kind of arrangement (require a sophisticated and expensive information gathering system) it is likely to be taken for a ride very quickly. Interest banking simply says if you want to borrow you must only take the lenders money if you are reasonably sure you can provide a guarrantteed return on the money.

What people are missing is that you can sit on your money all you want prepared to lend it to someone, NOBODY is forced to come and borrow that money unless they NEED it and can provide your demanded interest rate. Still, interest bank must have a reasonable idea where the money will go - they do this by imposing income requirements, conducting credit checks, etc. However, they do not get into your business with you as non-interest banking requires.

The example of the Islamic Bank advertizing mortgage loans is very revealing. How does such a bank make money from lending you money to own a house that you cannot afford, and yet avoid the appearance of collecting interest. This is what it does:
1) It adds all your fees to the value of the house you want to buy;
2) It applies a profit rate on top of that for each year or the entire life of the loan;
3) Once it has the total sum you must pay it divides by the number of periods for you to pay it (say 30 years times 12 months);
4) You pay the calculated amount from (3) in each period.

Such a bank doesn't charge you an interest rate, but it actually determines its profit rate based on conventional interest rates. What you have at the end is what they called "reverse amortization", which you can always unravel to obtain an interest rate on the loan.

From a non-religious viewpoint it is TOMATO-TOMAHTO; POTATO-POTAHTO. Perhaps it satisfies Islamic requirements, perhaps not. By all means let those who want it in Nigeria have it, but they must not in the process infringe on the rights of non-muslims to participate (safe of course for things like pork, alcohol, etc.). They must also take responsibility if religious fanatics translate the Islamic part of it into a religious edict.

Bottom-line, anyone that thinks he can get to make use of somebody's money without providing returns is fooling himself.

LFJ:

Let me make a clarification between the two, maybe this will help your understanding of the different between the profit and interest, at least from Muslim point of view. Money is not a commodity, meaning, we cannot buy and sell or lease money, interest in reality is buying and selling of money. The “profit” that comes out from this “transaction” is called interest.

Any other forms of increase in return (excluding those that came from forbidden transactions) is what is call profit in Islam. Or to take it further, profit is the residual return to the entrepreneur after all the factor of productions is paid their respective shares.

According to some scholars, they said interest drive economy is dangerous, it destroys the economy, instead of investing your money in real commodities/business and risk a loss, you might as well sit on your money, lend it and enjoy the “fixed returns”; no companies or jobs were created. It did add something to the economy, but the reality is that it destroys more than it creates.

Profit comes from the production of real goods/services and added real value to the economy.

Quite informative the posts here. . . . .but am particularly glad about one thing - the constant referral to the whole idea by the original, trouble-free toga of "Non-interest banking". . . . .if our leaders / policy-makers had any sense, this issue should never have been publicly introduced as "Islamic banking" knowing the suspicious nature of the Nigerian society at anything perceived to be ethnically or religiously motivated.

I heard the investors r from Iraq and Afghanistan, Terrorists!!!!!!!!!!!

LFJ:

Let me make a clarification between the two, maybe this will help your understanding of the different between the profit and interest, at least from Muslim point of view. Money is not a commodity, meaning, we cannot buy and sell or lease money, interest in reality is buying and selling of money. The “profit” that comes out from this “transaction” is called interest.

My Brother, even as an Engineer, I did not do economics in sch, yet i know much better than u, What is an average Aboki man doing with dollars in the street, is it not buying and selling, then defined commodity for me. We are saying that this poo Islamic Banking can work in the UK or Europe but not in Naija, because it will be bastardize by Almajiris and some selfish Sharia warlords. Only the name alone has given some ppl( Northern Elites) free money

strangest:

What good is the Islamic banking if they cannot support my alcohol drinking business, mstcheww

lol

Islamic banking is a banking product with no interest i.e non interest bank but profit making bank i.e both the lender and borrower shear the proceeds of the biz. And as regards who is financing any body can put his money into a biz

how can someone equate profit with interest

The use of fund is not free and it comes at a cost. While you will be right to say there is no free money, it is bereft of logical reasoning to say interest and profit mean the same.

INTEREST:

Interest is a charge on  loan. it applies at a fixed percentage on the principal sum and it is payable regardless of profitability. wether you make profit or not, you are obliged to redeem the principal sum plus the accrued interest.

Usually, a loan is  collaterised. The implication is that once a borrower fails to pay, the lender will make recourse to the borrower security(asset)

PROFIT SHARING:
How do i explain this simple, self explaining, unambigous terminology?

An entrepreneur comes to an islamic bank with a good proposal which they peruse.

If they find it worthy, the project is financed

If the business makes a profit, the amount is shared based on an agreed ratio and vice versa

se ko yato?

Difference:

Interest is variable in conventional interest based loan.

Profit is fixed from day 1 in islamic banking.

If you borrow money from an islamic bank, you know from day 1, how much you are supposed to pay back. After paying the full amount, The bank then releases the property to you as gift.

if a property cost 1M and they sell it to you for 2M, 1M is their profit, and this is clear legitimate business.

Would you rather I change you  18 - 25% on your principal? with + and - inflation value which can vary between 2 - 5% a year?

If you default on a business loan and you are not willing to pay back, they take over your company assets and liquidate it, and take their cash and give you the balance.

if its a mortgage, they sell the property at todays value and give you the balance. All this are drafted in the contract you have with them, when you take loans,

Its just sad that educated people cant research about this things themselves.

kayci_d77:

My Brother, even as an Engineer, I did not do economics in sch, yet i know much better than u, What is an average Aboki man doing with dollars in the street, is it not buying and selling, then defined commodity for me. We are saying that this poo Islamic Banking can work in the UK or Europe but not in Naija, because it will be bastardize by Almajiris and some selfish Sharia warlords. Only the name alone has given some ppl( Northern Elites) free money

Knowing more than me is never a crime, but knowledge without courtesy is what I see as a problem.

Profit and Interest may be similar but they are not the same. Interest are relate with loan or borrowing of money, why profit is majorly commodity base, meaning buying and selling of commodity. Aboki activities on our street are good example of commodity bases activity. May be I can help more by breaking down the different between the profits and interest so that you can fully understand major different between the two:


                           Interest                                                                                        Profit
  1. Excess over the principal in a loan transaction.                     1. Positive end result of business operation.

  2. Unearned income                                                    2. Has to earn by investing labor and capital.

  3. Return of principal with additional amount (interest).          3. No such surety. is ensured.

  4. Pre-determined                                                                      4. Uncertain

  5. Interest may repetitively be earned on a single transaction. 5. Profit may be earned once from a single deal.

  6. Prefixed cost of goods and services and creates inflation.      6. Profit is found after deduction of all
                                                                                                      expenses from total income. So it has no relation
                                                                                                      with inflation.

7. Interest increases money supply in the market.                     7. There is no opportunity of increasing money
                                                                                                        supply.

8. These is the opportunity of compounding                     8. Close end transaction.

9. There is no risk of erosion of capital.                                     9. Risk of erosion of capital is there.

10. No chance of negative end result i.e., loss.                     10. There is every possibility of negative end result.

And to the bolded part, I think there is need to respect each other, all of us cannot share the same religious believe. You can hate Hausa, Ibo or Yoruba, but never hate their religion. Let us wait till when Supreme Being will tell us who is right or wrong. The same way billion of Christians around the world cannot be wrong with who they choose to worship, billion of Muslims too can never be wrong. The problems are not with those two religions but with you and me who refuse to tolerate each other. Religion is only a part way or guide to your salvation; the name alone is not enough to get you salvation. Tolerance, love, and respect for your fellow human being are part of what will help you.

This internet banking is something i dont really see anything difficulty in it.

^^^^
Billion people can be wrong some time; the world population used to think the earth was flat not until one man debunked such refutation.

In this world it is possible for a billion people to be wrong and one person to be right,especially in the field of science.

If really Islamic banking was Soludo's idea, how come it did not raise any dust that time. Lets get it straight, the way Sanusi is going about it in a cosmopolitan society is completely wrong. The way sanusi and other Islam leaders say 'nothing can stop us' is very wrong.
The problem is not the name, but the motive of these northern bigots.

all4naija:

^^^^
Billion people can be wrong some time; the world population used to think the earth was flat not until one man debunked such refutation.

In this world it is possible for a billion people to be wrong and one person to be right,especially in the field of science.

Until Supreme Being confirms who is right or wrong it is reasonable to assume for now that everybody is right.

aspabay:

If really Islamic banking was Soludo's idea, how come it did not raise any dust that time. Lets get it straight, the way Sanusi is going about it in a cosmopolitan society is completely wrong. The way sanusi and other Islam leaders say 'nothing can stop us' is very wrong.
The problem is not the name, but the motive of these northern bigots.

Please do.educate me on the way Sanusi is going about it! Is it by doing the following:
1. Trying to get the guidelines sorted out.
2. Formulating a concise policy around what is already in operations.
3. Making public what was done behind closed doors
4. Being a muslim promoting Islamic leaned stuff.

Note that Soludo started it is not in doubt as he granted the 1st license, however he did not get roind to codifying the policies and guidelines around it which is what Sanusi is now doing.

So in a nutshell, what really makes this 'seemingly' novel conception any different from conventional banking. . . . .!? They still have interest on the loans and the bank still makes a profit!

attention bamosagie: pls note dat non interest banking does work as similetude of partnership watever givin out must be scruitnise of wch purpose d loan wl be use for and watever d profit and loss wl share appropriatly base on capital contributed by each partner. then d bank wl be in office and field to no d running course of d invstmt upon wch loan was given. watever gain acrued to d bank wl use to cover d administrative expenses and running cost.
for more info research or let chart mt online via chartin kokuman2007@yahoo.com

bfire: remeber b4 u buy a car d purpose of wsh u need d car wl b know and ur current earning must also be dsclose then an advise wl b given appropriatly!
pls research alot to know hw ds bank (non interest bank) is been practice in d real economy or let mt via chartin: kokuman2007@yahoo.com