By Fatoumatta Dukureh
West African Institute for Financial and Economic Management WAIFEM has Monday held a regional course on interest-free banking at Seaview Gardens Hotel.
The objective of the course was to provide a broad understanding of the rudiments of Islamic banking to participants. In particular, it will provide clarity on the Shariah requirements and the avoidance of riba (usury) in modern day banking business.
Speaking at the programme director general, WAIFEM Prof. Akpan H. Ekpo said:
“Apart from human resource development which is one dimension of capacity building, WAIFEM also plays a part in the development of appropriate institutional and organizational structures, systems and procedures for policy formulation and execution of economic management functions. The complementary tools used by the institute for the achievement of its objectives include short term training courses, national and regional training/ workshops, advisory and follow up missions, institutional management missions, fellow’s development schemes, and training of trainers’ scheme, attachment programmes, distance learning programmes and best practice studies. The clientele base has also been expanded to include the parliaments, media, development agencies and other private sector organizations.
“Modern day Islamic banking started over three decades ago, with the establishment of the Islamic Bank of Dubai in 1975. Other banks in the Middle East entered the market, and Islamic banking eventually spread to Asia, Europe, America and the rest of the world. Islamic banking or non-banking model is based on profit and loss sharing system. It rests on Islamic doctrine of “universal permissibility” in business dealings, which states that everything is permissible unless it is clearly prohibited’. Islamic banking is expected to give depositors another choice of where to invest their wealth. In this dispensation, the customer and the bank share the risk of any investment on agreed terms, and divide any profits that is accrue there from.”
“In our conventional banking environment, it is a fact that borrowers are at times rendered miserable and frustrated leading to failure as a result of overbearing interests rates. The irony is that while leading rates are always in up wards trajectory, deposit rates are pitiably low. A case for non interest on Islamic banking will therefore bridge this gap between the deposit and lending rate.
“Fundamentals of Islam and introduction to Islamic thought as it relates to banking and finance development and challenges in Islamic banking and finance concept and overview of Islamic finance legal and institutional framework operation of Islamic banking, Shariah governance framework, Islamic finance in a secular environment, Islamic financial products , risk management in Islamic finance , Islamic banking versus conventional bank, Islamic insurance, and operators perspective of Islamic insurance,” he added.
The Governor of Central Bank of the Gambia, Bakary Jammeh, said: “Non interest (Islamic finance), despite its name, is not a religious product or service restricted to Muslims alone. It is a series of financial products developed to meet the requirements of specific group of investors; it is bound by Sharia (Islamic law) and prohibits the taking or payment of interests. In its simplest form non interest banking requires that financial products from mortgages to savings accounts be structured to comply with Shariah law, and executed through the purchase or sales contracts based on the underlying assets.
“It is very evident that there has been significant growth in Islamic financial services in recent ways and there is every reason to expect that this growth will continue at a rapid based. Clearly there is expanding demands for these products, and a closely associated desire on the part of banks, including non-Islamic banks to provide Islamic financial services.
“Although, differences exist between Islamic and conventional banking, there are some fundamental principles that applied equally to both. This include strong corporate governance rigorous risk management and sound capital adequacy requirements which are essential ingredients to ensure the safety and soundness of any financial system.”
He added: “I will urge you to take maximum advantage of this opportunity of interacting with the experts assembled to facilitate the course to enhance your knowledge and skills as well as cultivating personal and professional friendship among ourselves.”