Financial sector regulators are optimistic National Treasury CS Henry Rotich will include proposed guidelines to guide the operations of Islamic finance firms in this year Finance Bill when he presents the 2017-18 Budget statement on Thursday.
“In 2017, we intend to have regulations for the supervision for ... the entire Islamic financial services sector in the country,” Insurance Regulatory Authority head of composite insurers supervision Mary Nkiomu said yesterday during a Takaful and Retakaful seminar hosted by Kenya Re.
She said the Islamic Finance Project Management Office established in December 2015 has submitted policy proposals to the National Treasury. The guidelines will enable sector the financial sector regulators to incorporate Islamic finance regulatory frameworks.
Islamic finance institutions are largely operating in a self-regulatory environment governed by religious principles, backed with regulations for conventional operations. The lack of a clear set of rules has, however, stunted growth, the forum on Takaful products heard.
The government, through the Islamic Finance PMO, has been looking at ways to standardise contracts and address consumer perceptions and concerns around Shariah-compliant products.
“We must evaluate how the (Shariah-compliant) business can be integrated into our economy,” Kenya-Re managing director Jadiah Mwarania said.
The country’s decade-old Islamic finance sector includes three Islamic banks, a Takaful insurance provider and several Islamic windows.
IRA is the only financial regulator with a framework that has incorporated Islamic finance, with clear guidelines on the operation of Takaful.
“For IRA at least we have, but the other four regulatory bodies do not have a framework. We hope that our proposals will be considered in the budget this week,” said Nkiomu.
The guidelines, drafted in 2015, are set be rolled out to the public for consultations this year. The delay in the roll out has been attributed to terrorist attacks over the years and the fact that Takaful was not realised in the Insurance Act.
“The Cabinet Secretary for the National Treasury in consultation with the IRA have been given powers to develop and issue regulations with regards to Takaful,” said Nkiomu.
Takaful Insurance of Africa is currently the only Sharia compliant insurer in the country. The firm entered the Kenyan market in 2010 after receiving the go-ahead from IRA which required the firm to comply with the Insurance Act.
Thank you for participating in discussions on The Star, Kenya. Note that:
- Unwarranted personal abuse and defamatory statements will be deleted.
- Strong personal criticism is acceptable if justified by facts and arguments.
- Deviation from points of discussion may lead to deletion of comments.