Permit banks to provide ‘interest-free’ products – Economist urges BoG
Adnan Adams Mohammed
The Bank of Ghana (BoG) has been urged to consider permitting or licensing commercial banks in the country interested in launching ‘Islamic compliance’ or ‘interest-free’ products to meet the needs of the large segments of the finance sector.
Professor John Gatsi, Dean of the Business School at the University of Cape Coast (UCC), who has shown keen interest in the operationalization of the interest-free or Islamic compliance financing wants the BoG to expedite action and come out with a regulation to allow implementation of such products as the Banking Act 2016 permits.
Islamic banking is banking or financing activity that complies with sharia (Islamic law) and its practical application through the development of Islamic economics. They mostly provide interest free loans. As of 2010, Islamic financial institutions operate in 105 countries.
“Any of the commercial banks in Ghana that is interested in putting out Islamic financial products will go in for that license to do so and begin to offer those product to the public and for businesses”, Prof Gatsi expressed during a TV3 discussion program, adding that, “So it is not about whether it is government or it is private. It is for the financial and regulator needs to inculcate its principles to; provide that window and the road map through which banks will now role pout this financial product.”
According to the 2016 World Islamic Banking Competitiveness Report, Saudi Arabia, Malaysia, United Arab Emirates, Kuwait, Qatar, and Turkey represented over 87% of the international Islamic banking assets.
A 2006 report by ISI Analytics also lists Saudi Arabia at the top and Iran as insignificant. In Qatar, Islamic banking assets were valued at $97 billion at the end of 2017, accounting for nearly 81% of total Islamic finance assets, according to QFC Authority chief executive officer Yousuf Mohamed al-Jaida.
The country also announced the launch of an energy-focused Islamic bank with $10 billion capital in 2019, which would make it the biggest Islamic lender for energy projects in the world.