Cape Coast, Central Region//-The Dean of University of Cape Coast Business School, Professor John Gatsi, has called on Ghana’s Parliament to reform the Banks and Specialised Deposit-taking Institutions Act, 2016 (Act 930) to accommodate ethical banking to achieve financial inclusion in the country.
According to him, the slow pace of amending the law to accommodate Islamic finance and banking denies the country of the immense benefits of inclusion and opportunity for choice of financial products.
Prof Gatsi made the call at a seminar on ethical finance and Islamic finance for students organized by Islamic Finance Research Institute Ghana at the University of Cape Coast in the Central Region.
“Act 930 is largely enacted for conventional banks and there is a need to create legal flexibility to accommodate governance structures conducive for Islamic banking”.
He also noted that the corporate governance design of the conventional banks in section 56 of Act 930 falls short of the two-tier corporate governance structures of Islamic banks needed to vet Islamic financial products and instruments.
Prof Gatsi who is a lawyer and economist said among other things that there are infrastructure support benefits to be derived by the country.
Speaking on a topic regulatory reforms for ethical finance, he explained that the World Bank and IMF have given recognition and acceptance to ethical finance in many countries including USA, UK , France, Germany, Nigeria, Uganda among others.
He said the issue about ethical finance should be looked at from a financial inclusion perspective and not from religious points of view though it is structured based on Islamic law.
Nigeria over the past few years has leveraged on Islamic bonds to construct roads, and federal projects, according to the economist.
Prof Gatsi said in delivery his lecture that section 18(1)(r) seems to grant non interest banking services but the restrictions and prohibited transactions in section 19 relating to direct participation in agriculture, housing and industrial development will not be in consonance with partnerships, joint ventures, and project finance arrangements in Islamic finance.
He explained that access to Islamic financial products, services and instruments has no regard to whether an applicant is a Muslim or not.
There is no fear about promotion of Islamic religion because it will not arise; rather entrepreneurs and businesses will have alternatives to finance their businesses in a socially acceptable and sustainable manner.
Prof Gatsi explained that regulatory reforms are only needed in licensing Islamic banks, individuals can enter various joint ventures and partnerships to foster interest free loans and transactions among themselves.
He stressed that regulations and the law come in when we are talking about Islamic banks for every financial institution must be licensed and be regulated.
The Professor called for broad-based engagement to include leaders of commercial banks, Muslim clerics, Christian leaders, academics, and parliament for better appreciation of the principles.
