CRITICAL ANALYSIS OF THE Legal And Institutional Framework For Islamic Banking In Nigeria
This dissertation looks at legal and institutional framework for Islamic banking in Nigeria with a view to identifying the challenges in the laws regulating Islamic banking as a part of the banking sector in Nigeria. Islamic banking unlike conventional banking derives its inspiration and guidance from the religious edicts of Islam. As such, it has to conduct its operations strictly in accordance with the directives of the Shari’ah. The main problem faced by Islamic banks is that governments often impose the laws governing the practise of conventional banking on Islamic banks. There is also a lack of understanding between the religious advisors and the bankers. This is because religious advisors do not understand the day to day operational needs of bankers and the bankers in turn do not necessarily understand the constraints of the religious principles. The objective of this research is to make analysis of the legal and regulatory framework for Islamic banking in Nigeria with a view to identifying the laws regulating Islamic banking, its limitations, its challenges and proffer solution where possible. In view of the above, the findings in this research reveal inadequacy of existing legal framework regulating Islamic banking in Nigeria. The major problems bedevilling the success of Islamic banking as a sub-sector in the banking industry have been identified. These include among others the fact that the statutory provisions regulating the operation of Islamic banking in Nigeria are inadequate. Consequently, law reforms are highly recommended. These reforms should however not lead to separate laws governing conventional and Islamic banks, but should involve proactive legislative efforts with a more robust supplemental rule addressing the idiosyncratic features of Islamic banking. Similarly, the dearth of skills and know-how for the operation and regulation of Islamic banking in Nigeria is the lack of educational institutions offering full-fledged certificate or degree programmes. In conclusion, progress needs to be made in developing stronger standardised regulations that are in line with international best practices. This would provide a more stable system within which both Islamic banking and conventional banking will flourish.
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