Proposed Solutions to the Legal Issues Affecting the Applicable Laws of Islamic Banking in Nigeria

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue X, October 2019 | ISSN 2454–6186

Proposed Solutions to the Legal Issues Affecting the Applicable Laws of Islamic Banking in Nigeria

Ishaaq El-Mubarak, A. M. O¹, Abdul Majid Tahir Mohamed^2*

 ^1,2Faculty of Law and International Relations, Universiti Sultan Zainal Abidin,Terengganu, Malaysia
*Corresponding author

Abstract:-Islamic banking applicable laws are lacking significant elements of standard IBF practice across the world. Provisions were not made for elements including the establishment of Islamic insurance companies, Islamic banking business, Islamic leasing business, Islamic capital market, takaful funds, takaful contracts, Islamic deposits, Islamic money market, Islamic foreign exchange market, credit sale (Al-Bai’ Bithaman ‘Ajil), advance purchase (bai’ salam), commissioned manufacture (Istisna’), hire purchase (Ijarah thumma bai’), set profile sale (Murabahah), etc in the establishing laws regulating Islamic banking in Nigeria. A legal framework was not constructed for project financing of Mudharabah, project financing of Musharakah, Islamic accepted bill, Islamic trade finance and so forth. Perhaps all the highlighted products and services are indeed a compliment to Islamic banking legal framework and not an alternative method to its operation. Hence, the study aims at proposing suggestions and solutions to the multifaceted issues in the applicable laws. The study applied an exploratory approach to survey for an efficient strategy competent to amend and upgrade the status and performances of IBF in Nigeria. In identifying the suitable strategies, the study concludes that four major entities including, government, individuals, regulators and legislators are responsible for the expansion of IBF status in Nigeria.

Keywords: Applicable laws, elements, legal framework, products, Islamic banking.

I. INTRODUCTION

Islamic banking applicable laws took almost two decades to produce a full fledge Islamic financial institution otherwise known as Jaiz bank in Nigeria. Banks and Other Financial Institutions Act(BOFIA) 1991 enactment paved a way for the recognition of Islamic banking as a Profit and Loss Sharing System. Prior to the enactment of BOFIA, speculations were formed as to whether the Act will solely be devoted to non-interest financial institutions. However, the provisions of the Act proved the conjectures wrong as Islamic banking performances are found below beneficiary expectations. In fact, subsequent amendments that were made to the extant framework degenerate initial protections. An important point is that positive amendments were largely ignored in the entire process.

Read More