The Ugandan parliament has passed a series of bills to address concerns connected to Islamic banking products, leaving only the Income Tax Amendment Bill for committee and cabinet approval.
The sitting was chaired by the parliament’s speaker, Anita Among, on Tuesday.
The bills were passed to clear the way for the long awaited Islamic banking, according to a statement by APO news agency.
The Financial Institutions Act has been amended in section 115B(2) to remove the provision for a Shariah Advisory Council, which MPs said would be over-legislation, instead opting for the Bank of Uganda to institutionally address operational issues relating to Islamic banking.
According to the statement, the country’s Attorney General, Kiryowa Kiwanuka, stated that keeping the committee provision in the Financial Institutions Act would complicate the central bank’s regulatory responsibility over a product it helped design.
“First of all, Bank of Uganda should never determine the business model of any commercial bank; it should sit outside to determine whether the product is safe for the customer; if it sits in the advisory council, who will protect the consumers?” he said.
MP Abdu Katuntu (IND, Bugweri) agreed with the Attorney General.
“You have to leave the Bank of Uganda structures to work; there is only one law, which is seeking to prescribe the operational work of Bank of Uganda; what you need to have is a department…they can create some departments in charge of Islamic Banking, and this can come under Regulations and not substantive law,” counseled Mr Katuntu.
He added, “Bank of Uganda cannot create and regulate a product at the same time.”
