This Dissertation aimed at evaluating the Operation of Non-Interest Banking Under the Existing Legal Framework in Nigeria. The work has evaluated the regulatory powers of Central Bank of Nigeria in designating products of Islamic Commercial Jurisprudence as banking business in Nigeria. In exercising those powers, the Governor of Central Bank of Nigeria issued Circular on Framework for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria has been analyzed with the products of non-interest banking, which is in line with the Constitutional motive of economic development in Nigeria. In view of this, therefore, the objective of this Dissertation is to identify the working modalities for the smooth operation of non-interest banking in Nigeria as a developing nation. However, the statement of problem of this Dissertation is whether the Governor of Central Bank of Nigeria has power to issue banking licence for non-interest banking and dictate on what Memorandum and Articles of Association of non-interest bank should contain. Also, the operation of non-interest bank is associated with uncertainty as regards to the law applicable to the settlement of dispute between non-interest bank and its customers, while the law governing the transaction is the principles of Islamic Commercial Jurisprudence. In the final analysis, this Dissertation concludes by recommending that Corporate Affairs Commission should design Memorandum and Articles of Association of non-interest bank in order to avoid issuing conflicting regulatory rules that will contravene the existing legislation. While on the other hand, non-interest bank should insert, in all its business documents, a clause in which parties will agree to resolve all disputes through arbitration. The arbitration process should be in accordance with the principles of Islamic Commercial Jurisprudence. In arriving at conclusion here, this work has drawn from a wide range of relevant text materials, statutes, case law, journals and internet materials. It is hoped that the views expressed here would be found useful by all categories of readers including banking sector regulators and bankers; and engender further research in this aspect of law
CHAPTER ONE GENERAL INTRODUCTION
This work sought to carry out “an evaluation of operation of non-interest banking under the existing legal framework in Nigeria.” This is in the light of the Guidelines issued by Central Bank of Nigeria (CBN) on banking operation under the Principles of Islamic Commercial Jurisprudence and non-interest window and branch operations of conventional banks and other financial institutions.1 Further to the release of the Guidelines in 2011, CBN issued a banking license to Jaiz Bank Plc in 2011 to operate under the Principles of Islamic Commercial Jurisprudence, which raised some legal issues relating to the operation of non- interest banking system.
The issues involved the power of CBN under Central Bank of Nigeria Act, 2007 and Banks and Other Financial Institutions Act2 to issue the license for the operation of Non-interest banking in Nigeria. Some of the issues were raised in the first Nigerian Case on the operation of non-interest bank in Nigeria, Godwin Sunday Ogbaji v. Central Bank of Nigeria & others.3 These also relate to regulatory and supervisory challenges relating to non-interest banking vis-à-vis the provisions of Companies and Allied Matters Act,4 Investments and Securities Act, 2007 and Nigerian Deposit Insurance Corporation Act, 2006.5