Muslims Mps in the Finance Committee of Parliament were shocked and disputed the assertion by Bank of Uganda regarding the absence of scholars due to limited qualifications to sit on the Council, and prohibition in the law for the bank not to take advice from any one. On this note, MPs asked the Central Bank to provide evidence against the decision.
The Clause in the Financial Act is up for amendment to contain Islamic banking in the next financial year, a move that started in 2019 to operationalise it. In 2004, BOU worked with Parliament to ensure the Legislation enabling the introduction of Islamic Banking products and consequently the financial institutions Act 2004 was amended in 2016. The amendment provided establishment of fully functioning Islamic Financial Institutions and for existing institutions to incorporate Islamic banking.
Islamic banking which is based on Sharia’ah law requires prohibition of payment and receipt of interest, mutuality of risk-sharing profit and loss, prohibition of investment in harmful sectors, uncertainty and speculations, which has caused mixed reactions.
BOU’s decision is based on it’s mandatory role to oversee all financial institutions and services through monitoring, regulating and advising which Islamic banking based on Sharia’ah law doesn’t permit. Well, hope isn’t lost as Parliament yet to decide.