NDIC Reveals Risks Facing Islamic Banks
By Prudence Ijah, Abuja – October 1, 2019
The Nigeria Deposit Insurance Corporation (NDIC) has identified emerging risks facing Islamic banks in the country.
The MD/CEO of the Corporation, Umaru Ibrahim disclosed the various risks during a conference on sustainable Islamic finance in Nigeria. He disclosed that such risks include underlying structural economic weaknesses, inflationary trends, and depreciating currencies.
He said: “These developments could potentially destabilise liquidity, raise Non Performing Financing and erode capital.
“Foreign currency risks also remain a significant concern for regulators and Islamic banks alike. Equally, there exist structural challenges around Liquidity management and legal accommodation in terms of existence and mechanisms for dispute resolution”. He stressed.
He however noted that, non-interest banking was gaining traction as the total assets of non-interest banks stood at N186.46bn as at the end of June 30, 2019, from N66.96bn in 2015.
He said the assets represent 0.49 percent of the total banking assets in Nigeria.
Umaru who noted that financial Inclusion is poor especially in the north, however, called on investors to invest in the establishment of Non-Interest Deposit Money banks and Non-Interest Microfinance banks to take care of this undeserved segment of the population.
The Managing Director of Jaiz Bank Plc, Hassan Usman, however, appealed to regulators, including the Central Bank of Nigeria, to create Sharia Compliance Liquidity Management Instrument for non-interest banks to invest in.
The aim of the conference which was organised by NDIC, is to awaken the consciousness of stakeholders on Non-Interest Banking, which is part of NDIC’s financial services system and operation while identifying and proffering solution to the constraints and challenges.
