The famous interest free lending criteria implimented by Sharia Compliant lenders and Islamic banking wings by conventional banks in kenya have seen many of the credit products availed to borrowers listed as Non Performing Loans(NPLs) under unfavourably auditing rules by the national regulator,Central Bank of Kenya(CBK).
During a media training last week at the Vision Institute of Professional Studies,three Islamic banking experts touched on asking CBK to come up with a new law in controlling Islamic lending.
National Bank's Chairman Mohammad Hassan,National Bank's director of Islamic banking Musa Adam and Director First Community Bank Abdullatif Essajee talked much on the above topic.
Essajee pointed out that, most of the sharia based loan products become NPLs because they are regulated under the same rules as the conventional loan products which is wrong.Islamic loans are interest free and based on 'utmost good faith'.Loans are repaid in an ethical manner at a time when the borrower is in a good state of doing so.This is when auditing is being done quickly, the loans become rated as NPLs.
The three islamic banking experts said that its time for Kenya to start using a different move in auditing books of accounts from islamic banks and take even another step further and design special books of accounts eliminating terminologies not applicable to Sharia Compliant lender Institutions.There should be a board both in the Shariah compliant banks and within the CBK of which the two bodies will exchange and interpret reports for the public.
The Impact.
When the CBK will impliment the expected islamic lending regulations,there will be reduced tendency of sharia compliant loan products falling under NPLs.
During a media training last week at the Vision Institute of Professional Studies,three Islamic banking experts touched on asking CBK to come up with a new law in controlling Islamic lending.
National Bank's Chairman Mohammad Hassan,National Bank's director of Islamic banking Musa Adam and Director First Community Bank Abdullatif Essajee talked much on the above topic.
Essajee pointed out that, most of the sharia based loan products become NPLs because they are regulated under the same rules as the conventional loan products which is wrong.Islamic loans are interest free and based on 'utmost good faith'.Loans are repaid in an ethical manner at a time when the borrower is in a good state of doing so.This is when auditing is being done quickly, the loans become rated as NPLs.
The three islamic banking experts said that its time for Kenya to start using a different move in auditing books of accounts from islamic banks and take even another step further and design special books of accounts eliminating terminologies not applicable to Sharia Compliant lender Institutions.There should be a board both in the Shariah compliant banks and within the CBK of which the two bodies will exchange and interpret reports for the public.
The Impact.
When the CBK will impliment the expected islamic lending regulations,there will be reduced tendency of sharia compliant loan products falling under NPLs.
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