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Central Bank of Nigeria to establish regulatory council for Islamic finance.

The Central Bank of Nigeria's (CBN) Financial Policy and Regulation Department has set out guidelines on the governance of Islamic financial institutions in Nigeria.

The CBN said, "An essential governance structure and element of regulatory oversight for institutions offering non-interest (Islamic) financial services is the establishment of an advisory body at the level of the Central Bank to provide assurance that the strategic direction and conduct of financial transactions of Non-Interest (Islamic) Financial Institutions (NIFIs) are in compliance with the rules and principles underpinning their operations.

"Section 9.1 of the CBN Guidelines for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria provides for the establishment of an advisory body at the CBN on Islamic banking and finance. The body shall be called the Financial Regulation Advisory Council of Experts (FRACE). The Council shall advise the CBN on matters relating to Islamic commercial jurisprudence for the effective regulation and supervision of NIFIs in Nigeria."

Members of FRACE will be appointed for renewable two-year terms and the council will consist of a minimum of five members. The Special Adviser to the Governor on Non-Interest Banking shall be a member, while the Director, Financial Policy and Regulation Department shall serve as the Secretary.

To serve on FRACE, members will be required to possess knowledge, expertise and experience in the field of Islamic Jurisprudence with specialization in the field of Islamic Commercial Jurisprudence. They should also be able to demonstrate: knowledge in the philosophy of Islamic law; knowledge of written and spoken Arabic as well as English languages; and exposure in the field of business, economics or finance especially Islamic Finance.

Among its duties and responsibilities, the FRACE will be required to:

Give expert opinion and assistance on non interest (Islamic) banking and finance matters referred to it by the CBN;

Give expert opinion and assistance on non interest (Islamic) banking and finance matters referred to it by other regulatory agencies in the Nigerian financial system, which shall include but not limited to: the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), the National Insurance Commission (NAICOM), the National Pension Commission (PENCOM) and Debt Management Office (DMO);

Endorse and validate application documents for new products and services, advert materials etc from NIFIs to ensure that they comply with the provisions of Islamic commercial jurisprudence;

Provide written juristic opinion of Islamic jurisprudence in respect of new non-interest (Islamic) financial products and instruments developed by the CBN or referred to it by the CBN or other regulatory bodies in the Nigerian financial system;

Provide final juristic opinion on issues of compliance with the principles of Islamic commercial jurisprudence in the field of economics and finance;

Provide support to the Central Bank of Nigeria in respect of questions or queries that may be raised regarding the Shari'ah compliance of financial products, instruments and institutions.

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Publication:CPI Financial
Geographic Code:6NIGR
Date:Feb 24, 2015
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