Islamic Banking.

WHAT IS ISLAMIC BANKING?

Islamic banking is interest-free banking, in which there is no fixed rate of return. It is a banking system that is run in accordance with the Islamic laws and the Sharia’ board; that guides the institutions. Islamic banking is guided by Islamic law principles and by Islamic economics. In particular, Islamic law prohibits usury, the collection, and payment of interest, also commonly called Riba in Islamic discourse”. Islamic banking also finds its roots in Islamic finance and all type of transactions are interest-free and of risk-sharing.

 ISLAMIC BANKING IN NIGERIA

In 2012 when Nigeria had Alh Lamido Sanusi as CBN Governor, the first Islamic Bank; Jaiz bank was introduced into Nigeria. Nigeria being a secular state, the operations of the bank were limited to the north and it operated as a regional bank until May 2016 when it got the license to open branches all over the nation. Again, this is a means of introducing Sharia into the fabric of our national life.

Issues with Islamic Banking

1. Islamic bank is governed by sharia law which in our constitution today should only apply to consenting Muslims.
2. Evidence abounds to support the fact that the clamor of non-interest banking is only a window dressing as interest is charged indirectly
3. The use of Arabic terminology instead of the globally accepted English financial language convention presents serious translation and interpretation risks.
4. Sharia banks also donate funds to “charity”. Sharia organizations eligible to receive this “charity” include mosques, Islamic centers, political groups, university endowment funds, or not-for-profit goodwill organizations as chosen by the Sheiks on the bank’s board.

Furthermore, Sharia banks have also been implicated in providing funding for terrorism. Interestingly, Abdulfarouk Mutallab the 23-year-old man who attempted bombing of a US plane with 228 passengers on board in Dec 2009 is the son of the present Chairman of Nigeria JAIZ bank; Alh. Umaru Mutallab.