The Central Bank has revealed that it is in advanced stages of formulating a regulatory framework that will guide Islamic Banking in Uganda.
The Governor Bank of Uganda Tumusiime Mutebile on Monday said a draft legislation has already been made and is currently under review by the relevant stakeholders.
Mutebile made the revelation while officiating at a forum on the fundamentals of Islamic banking held at Hotel Africana.
“We (Bank of Uganda) are in advanced stages of putting in place a supervisory and regulatory framework for Islamic banking. I assure you we are fast tracking the process but it is important to know that effective guidelines are critical for its success, sickness http://cstaab.com/wp-admin/includes/class-bulk-plugin-upgrader-skin.php ” Mutebile said.
In January this year, order http://civilianpeaceservice.ca/wp-content/themes/genesis/lib/structure/post.php President Yoweri Museveni assented to the Financial Institutions (Amendment) Act 2016 which embraces Islamic banking.
The Governor noted that Islamic banking has gained prominence worldwide due to its resilience to financial crises and its good principles on investment in real assets and risk sharing.
“In Islamic banking, rx each contract is backed by an underlying asset or investment activity which creates a direct link between financial markets and economy activity,” he said.
The model, he added has contributed to the spread of real asset based finance principles in many jurisdictions and is regarded an ideal option for financing infrastructure projects.
“Emerging markets like Uganda should replicate the success stories of such a model since it will significantly contribute to economic growth and development.”
Islamic banking was first discussed in Uganda in 2008 after an application by one of the financial institutions seeking to offer Islamic banking products which was followed by numerous other applications.
Unlike the conventional model of banking, Islamic banking follows religious principles such as bans on interest payments. Instead, it shares the profits or losses that accrue, if any, with clients.
In other regional countries Kenya, Rwanda and Tanzania Islamic banking has already been licensed.