Interest-Free Banking and Islamic Banking in Nigeria

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Interest-free Banking and Islamic Banking in Nigeria
By: Salim Salihu Muhammed
Nigeria’s quest for a virile banking reform had led to the adoption of several policies and strategies that would truly give the nation’s economy an edge towards growth and sustainability. No doubt, the bail outs of “failed banks” and the acquisition of toxic assets from bad banks’ books did saved the economy and Nigerians to a large extent from such kind of economic blows suffered in the Scandinavian banking crises. Without minding words as a follow up to an earlier publication, Zero Interest Banking in Nigeria: Identifying a Sustainable Module, I still emphasis on the identification of an achievable element for an Interest-free Banking System as well as supporting it to its plausible fullest, rather than introducing religious sentiments or interest that could harm the Nigerian financial sector. Less I forget in a hurry, do the Nigeria’s economic policy fault finders understand what Interest-free Banking entails?

It is true that the Central Bank of Nigeria (CBN) had emphasized on its readiness to establish or give licence to banks wishing to operate Interest-free Banking system (which is popularly known by many as Islamic Banking because of its tandem with Islamic jurisdictions and beliefs that prevent dealings in interest (Riba) or usury). It is also true that the Apex Bank has the jurisdiction, as provided in its Act to allow such financial or banking practice; but what should not be seen as true is the perceivers’ believe that the CBN’s policy was meant to enforce Islam or Shari’ah on Nigerians or construed as a personal agenda of the Apex Bank’s Chief. For the avoidance of doubts, as it were with conventional commercial banks, Interest-free banking system has its inherent pros and cons which affects the Muslims and non-Muslims alike.

A first glance of how Interest-free banking system operates could set a pace of reasonable understanding to its fault finders. The bank is...
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