Non-interest financial institutions operating under the principles of Islamic jurisprudence are illegal and unconstitutional, a Federal High Court sitting in Abuja has declared.

According to Justice Gabriel Kolawole, the license issued to Jaiz International Bank PLC to embark on Islamic banking in the country would have been nullified if the plaintiff in the matter, Godwin Sunday Ogboji had locus standi to institute the action.

“There are no provisions in the Central Bank of Nigeria (CBN) Act and the Banks and other financial Institutions (BOFIA) Act that empower CBN governor, Sanusi Lamido Sanusi, to issue license for non-interest financial institutions to operate under the principles of Islamic jurisprudence without the approval of the head of state through the minister of finance,” he said.

“Unlike the other specialised banks, the Jaiz International Bank PLC can only be established in the country with the intervention of the National Assembly by amending the BOFI Act. If not that the plaintiff has no locus standi to maintain this action, I would have nullified the illegal license issued to the Jaiz International Bank PLC by the CBN to operate non-interest banking under the principles of Islamic jurisprudence.”

Although Kolawole struck out the case for lack of locus standi, he urged the attorney-general of the federation to remedy the situation and ensure CBN’s compliance with provisions of the laws establishing it, in its execution of all its operations. 

Ogboji had approached the court, asking that the license issued to Jaiz International Bank PLC by the Central Bank of Nigeria (CBN) be declared illegal, null and void. He named the CBN Governor Sanusi Lamido Sanusi and the attorney general of the federation (AGF) as co-defendants.
 
He also asked the court to hold that the CBN’s guidelines for the regulation and supervision of institution offering non-interest financial services in the country under Islamic commercial jurisprudence, published in the Thisday newspaper of June 23, 2011 is ultra vires, are illegal, null and void.

Ogboji, a legal practitioner, further asked the court to maintain that only the National Assembly could lawfully designate the other Banks provided for in the BOFIA Act chapter B2 L.F.N. 2004 to the exclusion of any other body or institution.

But CBN and Sanusi asked the court to dismiss the suit on the grounds that the plaintiff had failed to disclose how the license and issuance of the guidelines had adversely affected him.

The court had, in the ruling, also added that ‘specialised banks’ mentioned in the BOFI Act were government banks such as the Federal Mortgage Bank, Peoples Bank and National Industrial Bank; and that they did not contemplate a bank with religious connotation such as in Islamic banking.

The judge cited Section 10 of the constitution barring government from adopting any religion, and added that “CBN does not have the power to designate Islamic banking as specialised banking.”

Source: The Will