Dar es Salaam. The government is now setting up regulatory frameworks for Islamic financing which is fast growing in the country. Currently, Tanzania has only one fully-fledged bank that provides only sharia-compliant financial products and services. But, three conventional banks have opened a window for Islamic banking.
However, there are no specific laws or policy that regulate the segment of the financial sector – except for ‘Islamic insurance’ – known as Takaful – whose regulations were approved early this year.
The Bank of Tanzania (BoT) regulates the Islamic banking window in the banks, doing so using the Banking and Financial Institutions Act of 2006, which does not specifically dwell on ‘Islamic banking.’
“We have issued a licence to one fully-fledged Islamic bank (Amana Bank), and given approval to three conventional banks (KCB Bank-Tanzania, People’s Bank of Zanzibar and the National Bank of Commerce) to offer Islamic banking services,” the central bank’s acting director of financial sector supervision, Mr Nassor Omar, told The Citizen.
He said the industry is still at its infancy stage and the issued license and approvals are based on the existing legal and regulatory framework because banks that offer Islamic banking also offer basic products such as deposits and financing.
The market share of Islamic banking deposits stood at 1.73 percent in September 2019, while its financing balance market share was 1.44 percent, according to Mr Omar.
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The development of regulatory frameworks is bringing hopes to industry stakeholders who said it will create a clear operating environment.
A member of the Centre for Islamic Finance, Compliance and Advice (CIFCA), Sheikh Mohamed Issa, said in an email that the absence of s legal and regulatory framework is somehow hindering development of the industry.
“We are currently lacking the legal frameworks which are essential in facilitating and allowing investors to access credible and reliable forum for legal disputes,” he said. He wondered if the BoT would quickly develop the frameworks in order to offer those who use Islamic finance with the same degree of protection and incentives as those who use conventional financial services.
“The legal and regulatory frameworks would recognize the special features of Islamic finance, and find appropriate responses to them rather than simply applying solutions already devised for conventional banks to Islamic banking and financing,” he noted.The Zanzibar Social Security Fund (ZSSF) managing director, Ms Sabra Machano, told The Citizen in November that people are still not aware of the regulations guiding […]
