Business Daily – Written by Ben Sanga
Conventional banks are penetrating the Muslim markets, which they had neglected for a long time. To capture the highly potential market, a number of local banks have recently launched sharia compliant products. Kenya has 42 conventional banks.
Islamic community leaders claim that some of conventional banks with sharia compliant services were not adhering to Islamic rules on banking.
"It is pity that some banks have never even established sharia advisory boards. We, Muslim leaders cannot afford to seat and watch the faithful being duped. We are morally and socially obligated to come out and advice our people accordingly," said sheikh Mohammed Dor, the secretary-general of council of imams and preachers of Kenya (CIPK) and nominated MP.
He said there were no checks and balances on the banks providing such services. He called for an oversight body comprising Muslim scholars, imams and sheikhs.
Islamic teaching as stipulated in the Koran prohibits Muslims from paying or receiving interests which is regarded as haram (ill gotten property). Although Muslim scholars have been arguing that the practice was enforced as a response to the age old practice of money lending or loan sharking, it still prevents Muslims from taking mortgage loans, carrying balances on credit cards or investing in bonds, treasury bills or any other instrument that has a guaranteed return or riba.
Conventional banks are penetrating the Muslim markets, which they had neglected for a long time. To capture the highly potential market, a number of local banks have recently launched sharia compliant products. Kenya has 42 conventional banks. The banks were expected to institute sharia advisory boards within their management to provide advice on how the institutions should handle the untapped but sensitive sector of Islamic banking.
According to Central Intelligence Agency (CIA) fact book, updated last month, Muslim population in the country accounts for about 10 per cent of the population although some argue that the population could be bigger.
The introduction of the new banking product has not been completely free of controversies in the world scene.
Islamic extremists have charged that this form of banking is inefficient. They accuse proponents of the concept of trying to impose strange rules on banking and of continuing to collect interest craftily.
"Other than Gulf African Bank and first Community Bank all other banks including those conventional ones that offer Islamic services do not even have special halls for women, which is what the religion demands. Such halls should be served by women," says Sheikh Dor. Call for an independent body to oversee sharia supervisory body of banks offering the services were also echoed by Esam Ishaq, a board member and sharia advisor with a Saudi Arabian-based organization.
Speaking during a workshop of imams and sheikhs in Mombasa this week, Mr. Ishaq from discover Islam Centre said prohibition of interest was not limited to Islam only, but also in Judaism and even in Christianity.
Islam encourages circulation of wealth and discourages its concentration in a few hands.
To narrow down the distinction between the rich and poor, and this product can benefit all Kenyans if they get to understand it says Mr. Ishaq.
Some of the major conventional banks that have introduced sharia-compliant services are Barclays Bank and Commercial Bank of Kenya.
