The Director General of the Global Institute of Islamic Banking, Insurance and Consultancy (GIIBIC), Mr Saeed Abdul-Muumin, has called for the regularisation of the Islamic banking system in Ghana.
When that was done, he said, it would bring a lot of the non-banking population to the banking sector, as well as help stabilise the economy.
Mr Abdul-Muumin, who made the call at an Islamic banking workshop in Accra, said currently, about 40 per cent of the nation’s population was not transacting any business with banks because of the fear of high interest rates.
The two-day workshop, which brought together some representatives from the banking industry, stakeholders, and policy makers, was organised by the GIIBIC, in collaboration with the AlHuda Centre for Islamic Banking and Economics (CIBE), a training institute based in Pakistan.
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The director-general explained that unlike the conventional system of banking that dealt with interest, Islamic banking systems operated on a profit and loss basis, such that individuals who took loans from banks to support their businesses only had to share the profit of the business with the banking institution that supported them, rather than paying a high interest on the loan collected.
Mr Abdul-Muumin, therefore, described the conversational system as problematic for families, individuals, corporate bodies, and even the state, saying, “Islamic banking avoids all the interest issues and deals solely on profit and loss”.
Islamic banking not limited to Muslims
Clearing the perception that Islamic banking was only meant for Muslims, Mr Abdul-Muumin said the banking system was only based on Islamic commercial law principles and their application to businesses and finances.
“This principle can be anybody’s principle but it just happens that it is using the Islamic principle which has proved to be viable for any economy,” he said.
Mr Abdul-Muumin said in countries such as the United Kingdom and Japan where Muslims were not dominant, they had made substantial progress with the Islamic banking system through favourable taxation and other policies that supported it.
Islamic banking in Ghana
Explaining the penetration of the Islamic banking system in Ghana, Mr Abdul-Muumin said some banks and financial institutions were already practising the system but did so quietly because the Central Bank had not regulated it yet.
“We have banks such as Access Bank which have some form of Islamic banking services, we also have banks such as Salam Capital, which has an Islamic micro-finance product, the Wenchi Rural Bank, among others, but they do this looking at the demand from the market,” he cited.
The workshop brought together some representatives from the banking industry, stakeholders, and policy makers.
A member of the Shairah Compliance Department of AlHuda CIBE, Mr Qazi Abdul Samad, who made a presentation at the workshop, introduced the participants to the Islamic banking modes of transactions, the important Sharia principle about Islamic finance, and the global overview of the Islamic financial industry.