Friday, July 22, 2011

Reps okay Islamic banking, cash limit

Lawmakers to educate constituents on benefits
THE House of Representatives has endorsed the Islamic banking and N150,000 cash withdrawal limit  introduced by the Central Bank of Nigeria (CBN).
The endorsement came after an intensive briefing provided by the CBN Governor, Sanusi Lamido Sanusi on the two initiatives on the floor of the House yesterday.
The briefing, which was applauded severally by members, brought out the benefits of the non-interest banking and the N150,000 cash withdrawal limit.
Lawmakers occasionally burst into thunderous applause as the CBN boss explained the motives behind the initiatives, especially when he challenged opinion and political leaders to lead by example and appreciate initiatives that would take the country from the doldrums.
Sanusi told the House that the first memo for approval of licenses for Islamic banking was received and approved by the CBN during the tenure of his predecessor, Prof. Charles Soludo.
The apex bank boss insisted that if Nigeria must meet up with other countries in terms of development, her citizens must learn to put things right in line with international standards. Sanusi declared that profit sharing without interest banking was not restricted to Islam and Muslims alone.
According to him, the first memo for approval for licences for Islamic banking was received and approved by the CBN during the tenure of Soludo in 2008.                  .
His words: “The fact is that some people approached the CBN and said based on the Banking and Other Financial Institutions and Allied Matters (BOFIA) Act, which made provision for non-interest banking, they wanted a licence to operate Islamic banking. And we issued guidelines. Soludo played more roles in formulating guidelines for the establishment of Islamic banking. I am only completing the job.”
He said the guidelines issued by the CBN for the operation of Islamic banking stipulated that no form of discrimination would be allowed in terms of employment, structure and transaction.
The briefing which was characterised by occasional applause for the CBN boss, also revealed that Islamic banking, like every other non-interest banking, entailed ethical and socially responsible investment, unambiguous terms, non-faith-based products and services and the prohibition of unlawful businesses.
On the N150,000 cash withdrawal limit, Sanusi said it was meant to generate funds to offset cash management, adding that by 2012, direct cost of cash in the Nigerian banking industry is estimated at N192 billion.
According to him, the circular never prevented any individual from withdrawing cash above N150,000 but whatever amount one withdraws in excess of N150,0000, there will be a charge.            
Tracing the genesis of the cash withdrawal limit, Sanusi said that the charges would help, “to reduce industry cost-to-serve by 30 per cent; increase access, convenience and service levels across the industry; enable greater financial inclusion and integration of financial services into the economy, with its attendant positive impact on economic development.”
Sanusi further lamented that most of the people criticising the limitation on cash withdrawal were in the elite class who, he noted, were supposed to educate the larger population on the wisdom of embracing a cashless economy.
He said: “cash transactions represent over 99 per cent of customer activity in banks. About 86 per cent of in-branch cash withdrawals are less than N100,000 in value while less than 10 per cent of transactions are more than N100,000.
“For the avoidance of doubt, no limit exists on cash transaction, but the very few high volume cash users should bear commensurate service cost while the most of Nigerians are exempted from subsidising them. The 90 per cent of Nigerians who are poor are subsidizing (the remaining) 10 per cent who are imposing the huge cost of cash on the system.
“The industry proposal is not to place limit on cash transactions, but to ensure that the 10 per cent of customers that make high volume cash transactions bear the associated cost and eliminate the subsidy by the mass public of banking customers. This will have a direct impact on banking industry efficiency and cost structure - reducing the cost of cash to the financial system, will result in significant savings that can be passed on to customers in form of reduced cost of banking services and lower lending rates to borrowers.”
Impressed by the submissions of the CBN boss, the Deputy Speaker, Emeka Ihedioha, who presided over the session expressed appreciation for the enlightenment provided by Sanusi on the two issues and declared that the motive for the invitation had been achieved.
Ihedioha said: “A number of us or all of us are satisfied with your presentation. We are better enlightened now on the issues.”
He said it was not meant to be a question and answer situation but to provide an opportunity for the CBN to enlighten Nigerians through the House about the contentious issues adding that the House was satisfied with the explanations provided.
Some members of the House have agreed to kick-start an aggressive awareness campaign to enlighten Nigerians on the merits of both the daily cash withdrawal limit and the non-interest banking policies.
The lawmakers, who fielded questions shortly after the CBN governor made his presentation, explained that the apex bank had not done enough to allay the fears of Nigerians on the grey areas in the policies.
Umar Adam Katsayal (CPC, Katsina State), said members needed to educate and enlighten their constituents to facilitate the acceptability of the Islamic Banking and N150,000 cash withdrawal limit.
Uche Ekwunife pointed out that many Nigerians were illiterate and stressed the need for the CBN to educate them to be conscious of the dynamics of contemporary banking especially in the area of Islamic banking.              
Ekwunife, who represents Anaocha/Njikoka/Dunukofia Federal constituency, Anambra State explained that the rumour trailing the policies had made traders to resort to keeping their money at home, a situation she which, she noted, was likely to increase the rate of armed robbery in the society.            
Also reacting, Robinson Uwak explained that many Nigerians were yet to understand what the CBN was talking about, even as he urged the authorities to take measures to help the apex bank win the confidence of the generality of Nigerians in the banking sector.
However, the Lawmaker who represents Oron/Mbo/Okobo/Udung Uko/Urue Federal constituency of Akwa Ibom State, berated the CBN governor, who he said, dwelled on ridiculing critics of his policies, especially some of the religious clerics who picked holes in the new policies.            
“He left issues bordering on Islamic banking and attempted to ridicule some clerics who have commented on the issue. These are sensitive areas he ought not to discuss.
“The CBN needs to educate Nigerians thoroughly and prepare their minds because every citizen has the right to keep his money or not, especially the grass roots before reaching a decision.”
Razaq Bello-Osagie said that as the country was desirous of being one of the 20 largest economies of the world in the year 2020, it must align with universally accepted best practices everywhere.
But the director of Social Communications of the Catholic Diocese of Nnewi, Rev. Fr. Hygi Aghaulo has described as extremely dangerous and unacceptable the introduction of the Islamic banking.
Tracing the history of what he called “past and on-going moves to enlist Nigeria into full membership of the Organisation of Islamic Countries (OIC)”, Aghaulo noted that among the key conditions set out for that was the practice of Islamic (Sharia) banking and that the positions of  petroleum and finance ministers must be reserved for Muslims.
He urged Christians in the country to summon their representatives in the various legislative houses immediately to direct them on how to ensure that the banking system did not take root in Nigeria as it was meant to protect only the interests of Muslims.

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