To end the constant complain of high interest charges by the conventional banks by creditors, the Banking Act is being reviewed to incorporate the concept and governance of Islamic Banking and Finance in the country.
Presently, two applications for the establishment of Islamic banks in Ghana are pending before the Central Bank awaiting approval to begin a different dimension of banking and finance in the 57-year history of the country.
The move, according to Bank of Ghana sources, is to provide funding options to businesses and creditors who are reeling under high interest rates by the conventional banks.
Much as lending from the bank may be discriminatory, it is expected to fill a gap as far as lending from the various banks in the country is concerned.
Head of Banking supervision of the Bank of Ghana, Mr Franklyn Belnye, said the banking act, 2004, (Act 673) was being revised to establish a framework for undertaking consolidated supervision of banks, including the yet to be approved Islamic banking and finance.
He added that the revision of the act would re-classify non-banking institutions and finance houses as Special Deposit-Taking Institutions with comprehensive provision for their regulation.
Speaking at a seminar on Islamic banking in Accra on February 20, a Deputy Governor of the Bank of Ghana, Dr Abdul-Nashiru Issahaku, was upbeat about the success of the concept of Islamic banking when introduced in Ghana.
The seminar, which was sponsored by the Bank of Ghana in collaboration with the Global Institute of Islamic Banking, Insurance and Consultancy (GIIBIC), was to examine the opportunities and challenges for the establishment of an Islamic Bank in Ghana.
Head of the Sharia compliance at the Al Salam Bank in Bahrain, Dr Mohammed Burhan Arbouna, who was the resource person at the seminar, said Islamic banks that were Sharia-compliant did not charge or pay interest.
Again, the Islamic banks do not finance projects that are considered not to comply with the principles of Sharia – such as investments in gambling, alcohol production and so on.
According to him, the business model of Islamic finance is based on partnership and not on “riba”, usurious interest taking, which is forbidden in the Koran.
Islamic banking is emerging as one of the fastest growing sectors in global finance. Estimates of the value of Islamic banking internationally range from US$200bn to US$500bn.