AN APPRAISAL OF THE PERFORMANCE OF ISLAMIC BANKS WITHIN THE FRAMEWORK OF ADL AND RIBA PROHIBITION IN NIGERIA

Alabi S. Otubu & Adetunji, A. Musbau

Abstract

Islamic banking is consistent with the principle of sharia which prohibits acceptance of interest on loans. Islamic finance has significantly spread to all parts of the world, even to United Kingdom, U.S, Denmark despite the regularly obstacles presented by operation in a non-Muslim financial environment. The Nigeria state has also join the other nations to establish (JAIZ) Islamic banking against all hurdles, misconstrued and initial misconception of what Islamic banks stand for. Thus as alternative to conventional banks that practice on interest which is considered unjust and is therefore, prohibited in Islam. Islamic banks are expected to operate on non-interest basis. By implication, Islamic Banks might guarantee Adl (Justice) and ensure that riba (Interest) which is prohibited in nass does not feature in their operations. This paper attempts to appraise the performance of Islamic banks within the framework of adl and riba prohibition. The study employed secondary source of data collection that is Quran, Hadith, journal publications etc our findings shows that lack of awareness and customers preference for conventional banks are the major challenges facing the development of Islamic banking in Nigeria, also some mix-up were observed in their operations, because most of them still adopt instrument use by conventional banks. The study therefore recommended that there is need for public enlightment on radio, television, newspaper etc about the operation of Islamic banking and benefits derivable from it, more research, seminars, workshop need to be organized towards evolving financial instrument for Islamic banks.