Sterling Bank Plc has begun sensitising the Muslim community on the need to embrace non-interest banking. Group Head, Non-Interest Banking, Sterling Banking Plc, Basheer Oshodi, said in a statement that there was need to let Nigerians know about opportunities the segment of the market presents. Oshodi, who spoke in Lagos at the weekend during a non- interest banking workshop organised by the bank according to the statement, said the lender was committed to introducing the banking concept to everyone. He disclosed that the bank recently got the Central Bank of Nigeria (CBN)’s approval-in-principle to practice non- interest banking in the country. “What we are trying to do here today, is to introduce non-interest banking to everyone. We have gotten approval-in- principle from the Central Bank of Nigeria (CBN). What we are doing now is to get people to be aware of what non-
interest banking is all about. We are trying to showcase the type of products we are going to come out with. Those
products cover both risk assets and liabilities,” he said. Oshodi explained that since the lender was yet to get a
final licence, the best it could do was to educate and sensitise the market on the need to embrace the concept. “Basically, because we do not yet have a final licence, we cannot go all out yet. But we can start sensitising the market, pending when we get the final licence from the CBN,” he said. He said findings showed that a lot of people, including the non- Muslims were very happy with the concept, and were interested in taking the investment option that it
presents. According to him, research showed that 30.5 million adult
Nigerians were willing to buy into non-interest banking products. Also, over 60 per cent of Nigeria’s adult population remained unbanked. Both scenarios, he said, were indications that the non-interest banking concept cannot fail in the country. Oshodi said the bank would not only be focusing on the 30.5 percent interested adults, but would also target the over 60 per cent unbanked population, when it finally begins operation. He explained that the CBN gives national banks window to offer Islamic banking products, using existing structure such as the branches, staff among others to drive the process.
He said aside getting a separate licence for non-interest banking Sterling Bank would also acquire a different information technology (IT) base, and segregate the customers’ accounts from those that are into regular banking.
“We need a different IT because there has to be account separation, so that if there is a non-interest banking customer that walks in, the cashier should be able to segregate the account.
There must be account separation,
and that’s what makes it different,” he said. He said the bank will be going into partnership transactions with its customers and also offering leasing
and other financial services. “If a customer wants to buy a car, we can buy it for him. In another case, we can buy the car, and lease it to the customer. Alternatively, if a customer wants to build a house for commercial rentage,
and he has land, but needs money, the bank can partner with such customer. The bank will bring in the money, and
at the end of the day, they can sell and share the profit,” he explained.
He said non-interest banks do not pay interest on deposits, but relies more on partnership and profit sharing, usually in a ratio of 70:30. The customer he said takes 70 per cent, while the bank takes 30 per cent from the profit, and also gives a portion to depositors. Oshodi further explained that there is always profit to be shared by all the parties because a non-interest bank creates a profit declaration reserve where a portion of its profit is kept. Such reserve is then shared at a time when there is no profit. “That makes it possible for the bank to ensure that at all times, the customer gets something good,” he said. Chairman, Advisory Committee of Experts on Non-Interest Banking, Sterling Bank Plc, Sheik Abdulkader Thomas said Nigeria is a huge market for non-interest banking given its huge population base. He said the banking concept is a viable means of gathering huge deposits that banks can even use in financing infrastructure and other
developmental projects. Thomas, who is an American, living in Kuwait, said
although Nigeria’s infrastructure is seen as weakness but deposits from non-interest banking can be used to fix it.
Chief Imam, Lekki Muslim Ummah, Imam Abdur-Raheem Ahmad Sayi, who spoke on “Prohibition of Riba” (Interest),
advised participants to key into the non interest banking concept because it presents huge opportunities for their
economic growth. He advised them to cultivate the habit of savings, and also identify with institutions that offer non-
interest banking products. Sayi said that a bank or any other financial institution is not expected to take advantage of the borrower but advised against loan default. He said Muslims should abide by the terms of agreement they enter with such institutions.
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