The Constitutionality Of The Proposed Islamic Banking: CBN Made a Blunder
My attention is drawn to the revised CBN circular reference No: FPR/DIR/CIR/GEN/01/017 dated June 21, 2011 which in a volte face reversed its earlier circular reference No: FPR/DIR/CIR/GEN/01/010. According to the circular of June 21, 2011 the CBN guidelines categorized non interest banking and finance into:
1) The provision of non-interest financial products and services based on principles of Islamic commercial jurisprudence.
2)The provision of non-interest financial products and services based on any other established rules and principles.
The guideline- it is observed provides for the following:
1) Application for license requirements for the non-interest banking in line with Islamic law and Jurisprudence.
2) That in line with section 39(1) BOFIA 1991 (as amended) the word 'Islamic' shall not be used by such banks as its business name but to use symbols to be designed by CBN.
3) That the applicant or promoters of the proposed bank shall have technical agreements with reputable Islamic banks.
4) That under the guidelines, transactions such as gambling, speculation, dealings in pork, alcohol, arms and ammunition, pornography and other goods and services which are not compliant with the rules and principles of Islamic commercial jurisprudence are prohibited.
A perusal of the above highlights of the June 21, 2011 guidelines will reveal that the CBN did not provide for similar procedure, rules and regulations for those who want to transact non-interest banking other than Islamic banking. In other words, the said guidelines only recognised and make provision for non-interest Islamic banking and no other. This means unless a prospective applicant is a Muslim or sharia compliant it cannot obtain a license to run non-interest banking. This provision is against section 16(1) a) of the 1999 constitution.
Secondly, the CBN by stating in the guidelines that the word 'Islamic' shall not be used by the applicant for Islamic banking makes no difference. The fact still remains that the article and memorandum of association, practice and procedure of the bank will be sharia law compliant.
Thirdly, the provision that such banks shall not give loans or allow for transactions in pork, arms and ammunition, alcohol and other goods and services prohibited by sharia law is unconstitutional. See section 38(1) 1999 constitution (freedom of thought, conscience and religion) and section 10 of the Nigerian constitution which declares that Nigeria shall not adopt any religion as state religion i.e, secular state.
It is my view that the CBN should seek judicial interpretation of the proposed Islamic banking guideline vis-a-vis the Nigerian constitution and section 39(1) BOFIA 1991 as amended so as not to ignite speculation as to the constitutionally of the guidelines moreso at a time the Country is currently passing through religious and security challenges which . And where(as I had read) this matter has been taking to the law Courts for interpretation, I advise the CBN to suspend further action on this proposed Islamic banking until the Courts dispose of the matter.
Osuagwu Ugochukwu Esq
Human Rights Attorney