Islamic Banking: CBN Declines Al Qaeda's Request For Licence

Amidst fears that the proposed Islamic banking system, may create an avenue for terrorist financing in Nigeria, the Governor of Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi, Monday revealed that a group had earlier in the 1990s, applied for licence to establish an Al Qaeda Bank in the country but was not approved

The CBN chief who disclosed this at the opening of an international conference on Islamic Banking in Abuja, said that the group’s application was turned down for failing to meet requirements for banking licence.

Another group that applied for licence to establish another Islamic  Al Barka Bank, was equally turned down, Mallam Sanusi said.

His words, “in the early 1990s two applications were received and processed for Islamic banking licence: Al Barka Bank and Al Qaeda Bank.  However, those two banks could not meet the requirement for the grant of a final licence”.

But the governor insisted that he would pursue the current move for the establishment of Islamic banks in the country unless stopped by a law court, as according to him, the history of Islamic banking dated back to 1991.

“The history of Islamic Banking in Nigeria dates back to 1991 with the promulgation of BOFIA, Banking and Other Financial Institutions Act which provided the legal guidelines for the regulation of non-interest of profit/loss sharing banking in the country”, he said.

Mallam Sanusi added that by  1996, the then Habib Bank sought and obtained CBN approval to operate Islamic banking model.

Also Jaiz, a company that has been promoting Islamic banking in Nigeria, “got an approval in principle in 2004 but could not take off due to lack of capital”.

He said that the CBN under his administration was not promoting Islamic banking but only doing its duties of providing necessary guidelines to ensure adequate regulation for its operations.

His words, “we have the responsibility to continue to explain that the CBN is neither promoting nor establishing an Islamic bank.  The CBN is licensing and regulating Islamic banking and that is under the law”.

Mallam Sanusi said critics of Islamic banking were politicizing the issue based on religion rather than looking at it from the economic perspective.

“I think it is because of Nigerian politics- highly divided, highly sectarian.  I think we are in the habit of using every opportunity to exploit religion or ethnic difference for political ends”, he said.

The governor said that the CBN was acting within the Provisions of the Banks and Other financial Institutions Act, BOFIA, and that those who felt otherwise should go to court.

“Anybody who feels Islamic banking is illegal should go to a court of law because it is only the court that decides if something is illegal or not.  If a court says it is illegal, we will stop it.

“But we don’t think the court will say so because we know it is within the realms of the law.  It is only a court of law that can make a pronouncement on the legality of anything”.

In his welcome address, the CBN Deputy Governor , Financial System Stability, Dr. Kingsley Moghalu made effort at convincing the audience that Islamic banking was not a ploy to Islamize the nation.

He said the banking model existed in countries with Muslim minorities such as the United States of America and the United Kingdom.

He said the risk sharing principle would lend the bank’s resources for huge infrastructure projects in the power and transportation sector.

He said that Nigeria had become an Executive member of the Board of the Islamic Development Bank, IDB, and would benefit from the near $ 1 trillion assets of Islamic banks across the globe.    Mr. Isamil Toure who represented the President of the IDB, Dr. Ahmed Ali said that with the population of Nigeria, it would become the largest market for Islamic banking as well as IDB financing