What you need to know:
Islamic banking, which heavily relies on the principles of sharia, is contained in 2016 amendments of the Financial Institutions (Amendment) Act. It empathises equitable sharing of losses and profits, if any, between the bank and the client.
Kampala. Three financial institutions, including two foreign and one local bank, have applied to offer Islamic banking in Uganda, according to Bank of Uganda Deputy Governor Louis Kasekende.
Speaking during a public engagement in Masaka, Dr Kasekende, said Bank of Uganda was processing three applications that are seeking to offer Islamic banking services.
One of the applicants, which he did not reveal, is currently offering traditional banking services in Uganda while the other two are entities outside Uganda.
However, sources familiar with the matter told Daily Monitor on condition of anonymity that among the applicants are Tropical Bank and MiSK Bank, which currently has operations in the Middle East.
Daily Monitor could not independently verify the claim.
Islamic banking, which heavily relies on the principles of sharia, is contained in 2016 amendments of the Financial Institutions (Amendment) Act.
It empathises equitable sharing of losses and profits, if any, between the bank and the client.
Finance Minister Matia Kasaija, early last month told Daily Monitor that Islamic Banking had already been operationalised in Uganda.
The revelation followed concerns by a section of the religious leaders, who said they did not know the agenda of the new system and how it works.
However, Mr Kasaija said government had already signed off the Islamic Banking instruments, which meant that applicants were free to apply for licences.
Dr Kasekende said BoU was finalising consultations with various stakeholders to establish the Shariáh Advisory Council before they Central Bank can issue the licences.
The Shariáh Advisory Council, he said will oversee regulation and supervision of the Islamic Banking segment in Uganda’s financial sector.
He also noted that BoU will be publishing details on which business activities are or not permissible under Islamic Banking and what is required of customers, financial institutions and BoU as a regulator.
During their annual general meeting early last month, bishops under their umbrella organisation Uganda Joint Christian Council (UJCC), which brings together Anglicans, Catholics and Orthodox churches, resolved to lobby government to stay the implementation of Islamic Banking system, arguing that they do not understand its motive and how it works.