Islamic banking cleared for business, says regulator

A client transacting business at a counter in a banking hall. Any commercial bank in Uganda is now free to offer Islamic Banking products after the amendment of legal restrictions. FILE PHOTO

What you need to know:

Belief. The product is consistent with the principles of Shari’ah law.

Kampala. Almost eight years since the discussion started, commercial banks in Uganda can now offer Islamic banking products.
This is after the legal restrictions that made it difficult to have such an alternative model of banking were amended.
According to the Ministry of Finance and the Central Bank senior technocrats, regulations to allow the smooth operation of the Islamic banking have also been finalised.
This means that Islamic banking products can now be offered within the premises of the existing commercial banks or even a fully-fledged bank providing purely Islamic finance (in this case Islamic banking) can be established uninterrupted.
Islamic banking model is different from the conventional model of banking. Whereas charging of interest is at the heart of conventional banking, in Islamic banking model that is not allowed. Instead it shares the profits or losses that accrue, if any, with the clients.


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