The Central Bank of Nigeria (CBN) has inaugurated the Financial Regulation Advisory Council of Experts (FRACE) for institutions offering non-interest financial services based on compliance to the principles of Islamic commercial jurisprudence in order to prevent conflicts between Islamic financial institutions and conventional banks.
While speaking at the event last week in Abuja, the CBN Governor, Mallam Lamido Sanusi said the establishment of the FRACE was in line with the provisions of the apex bank’s guidelines for the regulation and supervision of institutions offering non-interest financial services.
He added that it would prevent a scenario where the non-interest institutions would steal customers and depositors away from the market in the name of compliance with Islamic commercial jurisprudence, while in actuality, they were offering the same interest-based products with different names under the guise of compliance.
“The establishment of FRACE is to ensure that products and services offered by the non-interest financial institutions satisfy the requirements for compliance to the principles underpinning their mode of operation, so as to meet the expectation of their stakeholders, which is a concern for regulators,” he said.
Sanusi explained that the members were appointed solely based on their expertise and experience in their fields of specialization and urged them to bring these to bear in the discharge of their duties.
He highlighted some of the duties of the FRACE to go beyond advising the CBN on matters referred to it, but to also make available its expertise to other regulatory agencies in the Nigerian financial sector in the area of Islamic financial services if they choose to refer to it matters under FRACE’s expertise.
Also speaking at the inauguration, Director-General, Securities and Exchange Commission (SEC), Ms Arunma Oteh, expressed the desire of the commission to make use of the expertise of such an organ, especially as the SEC has already made rules on Islamic fund management.
In his response, Chairman of the FRACE, Sheikh Sheriff, commended the CBN’s financial strategy, adding that financial banking would bring financial inclusion.