CBN releases guidelines on how income not allowed in Shari’ah is disposed

The Central Bank of Nigeria (CBN) has issued a guideline to Non-Interest Financial Institutions (NIFIS) on the disposal of Non-Permissible Income (NPI).

NPI is any income that accrues to the institution in a Shari’ah noncompliant manner, such as interest income, penalties for delayed payment of debt obligations, or any income declared by the ACE of the institution as impermissible according to the Shari’ah.

The guidelines issued on Wednesday was specifically directed to the Advisory Committees of Experts (ACE) of the Non-Interest Banks (NIB).

The ACE are In charge of supervising and monitoring of the disposal of NPI.

The guildines read: “NPI is not an object of ownership of the NIB and does not confer any ownership rights on it.

“The NPI shall be put in a dedicated NPI account and shall not be commingled with the funds of the NIB.

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CBN also noted that while the NIB is under obligation to dispose of any NPI that accrues it must be within the recommended guidelines.

According to CBN should the money be disposed to a charitable cause which is regarded as proper disposal the NIB must not stand to benefit from the charitable cause in any way, even if by goodwill.

CBN also stressed that the charitable cause must not give benefit to any shareholder, director, ACE member or management staff of the NIB.

“The disposal to the charity shall not be constituted nor included as part of the Corporate Social Responsibility of the NIB,” it added.

Other instructions are that the ACE shall ensure the NIB does not delay the disposal of the NPI without justifiable cause, as any unjustifiable delay shall be tantamount to the NIB deriving benefit from the prohibited NPI.

CBN further asked the ACE of the NIB to submit a quarterly and annual report to the CBN on the disposal of the NPI by the respective NIB in a specific format.

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