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There is a refreshing development in the banking sector that is breathing a new lease of access to fund users who are bugged down by the complexities of conventional banking institutions. By their mode of operation, these Deposit Money Banks rely on the interest they generate from customers’ deposits for their sustenance.
By CBN’s definition as dictated by BOFIA, NIFI means a bank or Other Financial Institution which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with any established non-interest banking principles.
These guidelines have become necessary as the CBN gets inundated with requests from persons, banks and other financial institutions desiring to offer non-interest banking products and services based on Islamic commercial jurisprudence in Nigeria. To that extent, therefore, all non-interest financial institutions under this model are required to comply with these and any other guidelines that may be issued by the CBN from time to time.
Also a license to undertake Islamic banking business operations may be issued by the CBN upon such terms and conditions which authorise the operation of a non-interest financial institution on a regional or national basis for banks, or any other basis for other financial institutions. It is also important to note that these non-interest financial institution may charge such commissions or fees as may be necessary in accordance with the principles under this model and the guide to bank charges without being accused of conflict of interest. Funds so received as commissions and fees shall constitute the bank’s income and shall not be shared with depositors.
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