The Malawi Muslim community and those who like the Islamic banking system can now afford a smile after government officially approved the system.
Among the importance of the system, is that it doesn’t demand any interest from the borrowers as is the case with non-Islamic banking systems.
Registrar of Financial Institutions Dr. Dalitso Kabambe, who is also Reserve Bank Governor, wrote in the approval document and seen by Maravi Post, that this will only be through “Window Model Only.”
“This shall entail banks offering Islamic (non-interest) Banking products, alongside conventional banking facilities,” says Kabambe.
He says in this regard, bank supervisors will shortly be engaging with each bank to provide guidance on reporting requirements of Sharia-compliant products and services.
“Once developed, the guidelines will be shared with each bank,” Kabambe said.
The International Monetary Fund (IMF) said in its recent report that Islamic Finance has the potential to spur inclusive growth, but calls for its proper regulation and supervision.
In relation to this, the Muslim Association of Malawi recently invited an expert in Islamic Finance and during the meeting facilitated by South African Mufti Ismail Ebrahim Desai, a renowned scholar in Islamic Finance and Banking.
Key features of Islamic banking include a prohibition on interest, an emphasis on ethical standards that embrace moral and social values, and the overarching principle of fairness when handling liability and business risk.
The system’s popularity in many North African and Middle Eastern countries, stems from the less speculative nature of its products.