IslamicFinance.de

In August 2017, the Central Bank of Nigeria (CBN) introduced two liquidity management instruments for non-interest financial institutions, a Funding for Liquidity Facility (FfLF) and Intra-day Facility (IDF). In a February 2017 report, the IMF mentioned the lack of such sharp liquidity instruments as a key risk to the financial systems of countries where there are Islamic banks. Therefore, the CBN’s recent move is a welcome development. More Nigerian banks would be wise to have Islamic banking windows, but they must be mindful of some potential pitfalls. Customers might be sceptical about whether the bank is truly able to separate its Islamic banking arm from its interest-earning entities. There is also the possibility of regulatory arbitrage, where the bank potentially transfers risk between the two arms, depending on which is favourable. The CBN seems well-geared to handle such potential abuses.

The Central Bank of Nigeria (CBN) recently released a new categorization system for "Non-Interest Islamic Microfinance Banks" (NIMFBs). CBN organized NIMFBs into three categories: "Unit", "state" and "national". Unit NIMFBs must have a minimum capital of NGN 20 million (USD 71,000) and may open one branch location within the same municipality as the organization’s headquarters. State NIMFBs may operate in one state if they maintain minimum capital of NGN 200 million (USD 350,000). Institutions in this category may open multiple branches in the state within which their headquarters are registered. A national NIMFB is permitted to operate in any state or territory of Nigeria so long as it holds NGN 2 billion (USD 7 million) in capital.

The Central Bank of Nigeria (CBN) has granted Jaiz Bank national license to operate Islamic non-interest banking in all the states of the federation. Chairman of Jaiz Bank Alhaji Umaru Abdul Mutallab said the bank intends to roll out in all the 36 states and the Federal Capital Territory (FCT) in two or three months times. Alhaji Sa’ad Abubarkar III, the Sultan of all Muslims in Nigeria, congratulated and warned that Jaiz bank must conform with all rules and regulations of Islam.

The Central Bank of Nigeria (CBN) released guidelines on the regulation and supervision of non-interest microfinance banks (MFBs) in the country. In the document the banking sector regulator placed the NIMFBs into three categories namely Unit, State and National. A Unit NIMFB is required to have a minimum paid-up capital of N20 mn, a State NIMFB is required N100 mn, while a National NIMFB required N2 bn.

After the approval for “Sharia compliant” equities by Central Bank of Nigeria (CBN) last year, in 2012 an Islamic window opened on the trading floor at the Nigerian Stock Exchange (NSE). This is the first faith-based financial window in Nigeria, which fact causes fears that a deliberate Islamic financial services industry may have unintended consequences on equity transactions. The goal is to enthrone Islamic financial principles in equity trading, by tracking the performance of Sharia compliant stocks on the exchange floor.

The contribution of a membership fee of N875 million to the International Islamic Liquidity Management Corporation (IILM) by the Central Bank of Nigeria (CBN) as a founding member, is raising suspicions about the apex bank’s resolve on accountability and transparency in it’s operations.
It seems that there are complaints by worried Nigerians that the CBN was forcefully gathering the country into the membership of the Corporation, a supranational entity, organized to float financial instruments to facilitate liquidity management.

A draft framework for non-interest banking was issued in March 2009 by the Central Bank of Nigeria (CBN). Inspite of this, its position on Islamic banking did not become much of an issue until a few months ago when the final guidelines were released.
D.A. Eke, acting director of banking supervision at the CBN, stated that the objective of the framework is to provide minimum standards for the operation of non-interest banking in Nigeria while serving as an exposure for comments, suggestions and/or inputs by stakeholders. The problem is that suggestions and/or inputs from stakeholders never came.

Mallam Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria (CBN), disclosed plans by the apex bank to sell its first ‘sukuk’ within 18 months.
The banking sector regulator has the strong oppinion that this will help arouse interest in Islamic banking in the country.

Because of the the new guideline on Non-Interest Financial Institutions (NIFI) by the Central Bank of Nigeria (CBN) a big legal battle is going to take place.
The guideline was signed by the Acting Director, Financial Policy and Regulation Department of the apex bank, Chris.O. Chukwu and became operational on January 13, 2011. It introduced religion into Nigerian banking, although it was forbidden by the Banks and Other Financial Institutions Act 1991. Four Senior Advocates of Nigeria (SAN) have been engaged by some Nigerians to fight the new guideline at the Federal High Court, Abuja.

The move by the Central Bank of Nigeria (CBN) to introduce Sharia banking is generating divergent views.
Former Executive Director of Bank PHB, Richard Obire, thinks that the platform creates multiple consumers of financial services as it will make banking available to more target markets.
A financial commentator based in Abuja, Martins Obi, said the concept of Sharia banking is a welcome development as long as it remains an option to bank customers.

The Central Bank of Nigeria (CBN) has directed that all Non-Interest Financial Institutions (NIFIs) desiring to operate in the country to carry out an internal Shariah audit on a periodic basis, to examine and evaluate the extent of compliance with Shariah rules.
The guideline stipulates that a non-interest bank with regional banking authorization shall be entitled to carry on its banking business operations within a minimum of six (6) and a maximum of twelve (12) contiguous states of the federation, lying within not more than two (2) geo-political zones, as well as within the Federal Capital Territory (FCT).

The Central Bank of Nigeria (CBN), has identified the dearth of knowledge, skills and technical capacity to regulate, supervise and operate Islamic bank as major hindrances to the successful take off of the model.
The non interest banking model is a banking regime that offers services, products and financial instruments based on compliance to Islamic laws.