Analysis of Non-Interest Banking Growth and Regulatory Framework in Nigeria

Non-interest banking, operating under Islamic finance principles, has grown significantly in Nigeria since the Central Bank of Nigeria issued its non-interest banking framework in 2011, yet its regulatory adequacy and growth trajectory warrant professional analysis. This study analyses the growth pattern and regulatory framework of non-interest banking in Nigeria for the period 2012 to 2022. Secondary data were sourced from the Central Bank of Nigeria's non-interest banking supervisory reports, the Islamic Financial Services Board standards, and the annual reports of Jaiz Bank, the oldest full-fledged non-interest bank in Nigeria, alongside non-interest banking windows of selected commercial banks. Growth was measured by total assets, deposit volume, branch network expansion, and product range diversification. Regulatory adequacy was assessed against the Islamic Financial Services Board Guiding Principles on Governance. Descriptive trend analysis and comparative regulatory benchmarking were employed. Results showed that non-interest banking total assets grew from 38 billion Naira in 2013 to 642 billion Naira in 2022, a 16-fold increase. However, the sector accounted for only 1.2% of total banking system assets by 2022. Regulatory gaps were identified in Shariah audit standards, zakat fund management, and profit-sharing investment account protection. The study concludes that non-interest banking is growing rapidly but remains a niche market, constrained by limited product innovation and regulatory standardisation gaps. Aligning the Central Bank of Nigeria's framework more closely with Islamic Financial Services Board standards is recommended.

Keywords: non-interest banking, Islamic finance, Jaiz Bank, regulatory framework, Nigeria