Expanding financial inclusion through non-interest banking

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Non-interest banking is increasingly attracting attention among investors globally, especially in 2019 which saw a double-digit growth in assets.

According to a report by, despite the tumultuous year for global financial markets last year due to the COVID-19 pandemic, there is growing interest on this form on banking instrument due to three reasons—greater appreciation around the role that it plays in responsible investing; geographical interest in markets where it is gaining prominence; as well as digital transformation, which makes it investments more accessible.

A Growing Industry, Attracting New Interest Globally
In 2019, non-interest banking assets amounted to US$2.88 trillion, the highest recorded growth for the industry since the global financial crisis.

The prospects look positive: by 2024, this is set to rise to US$3.69 trillion.

But there remains significant opportunities elsewhere in the world, according to the report.

That is why in Nigeria, financial institutions have also been positioning themselves to tap from these huge market.

One of such is Lotus Bank Limited.

The financial institution was recently granted non-interest banking licence by the Central Bank of Nigeria (CBN).

Lotus Bank seeks to pursue the mission of creating value and growth for all through digital innovation and best-in-class customer experience for Nigerians.

Founded & Chaired by Mrs. Hajara Adeola, who is also the Managing Director of Lotus Capital (the pioneers of non-interest finance in Nigeria), the bank is starting its operations on a solid foundation of experienced leadership and a strong Advisory Council of Experts (ACE).

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Lotus Bank is managed by a team of seasoned professionals and financial experts led by the Managing Director/CEO, Mrs. Kafilat Araoye who has over 25 years commercial banking experience.

According to the Managing Director, Lotus Bank’s focus and guiding principle is, “to deliver an alternative option to interest-based banking and to cater to the needs of not just the banked but also the under-banked and unbanked population.”

She explained that non-Interest banking is geared towards supporting the real sector, adding that Lotus Bank aims to improve financial inclusion in the country.
“In addition, the bank will operate transparent pricing models as is the norm in non-interest banking.

“Our values are deeply rooted in partnership. A critical component of our mission is the provision of innovative solutions that drive ethical prosperity for all stakeholders.

“We pride ourselves on digital solutions that provide our customers with the convenience of unlimited access to our services and products,” she added.

Araoye further stated that, “Our products and service offerings will include non-interest business financing, deposit products (current, savings and investment accounts) and personal financing.

“The bank aims to be a socially responsible organisation that will satisfy its customers across all touch-points.”

With its flagship branch located at Victoria Island, Lagos, the bank will open its doors to customers from July 7, 2021.

Non-interest banking is recommended to all Nigerians who desire to be involved in ethical and non-speculative business.

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“Lotus Bank is the first non-interest bank to commence operations from South-west, Nigeria with a focus to serve people of all faith,” the financial institution added.

Lotus Bank is deeply rooted in ethical banking and committed to ethical investing and ethical prosperity. The financial institution is committed to deepening financial inclusion and broadening the array of non-interest products available to the banked, unbanked, and under-banked population.

The bank’s values are bold, ethical, and birth new ideas. They are a testament to its desire to deliver a differentiated customer experience that supports Nigerian businesses and supplies shareholder value.

Prior to founding Lotus Capital, Hajara Adeola previously worked with Arthur Anderson Consulting (now Accenture). She also was a Director at UBS Warburg, heading their London Islamic Finance Desk. Before joining UBS, she was a convertible bond research analyst at BNP Paribas, London, where her primary responsibility was to analyse, write, and publish daily and quarterly research on European convertible bonds. She also at a point was with ARM Investment Managers.

Hajara is regarded as the top industry expert in Islamic fund management in Nigeria.
She holds a Master’s Degree in Finance from Durham University, where she specialized in Islamic Finance. She also holds an MBA in International Management from Exeter University and a Bachelor of Science Degree in Pharmacology from King’s College, London.

She is a Fellow of the Africa Leadership Initiative-West Africa and a member of the Aspen Global Leadership Network.

Also, Kafilat has expertise in virtually all areas of core banking, with emphasis on International and Domestic Operations, Payments, General Management, Business Development, Risk Management, Human Resources and Strategy.

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Non-interest banking assets have been grown faster than conventional banking assets, according to reports, adding that there has been an increased interest in Islamic finance from countries such as the United Kingdom, Luxembourg, South Africa and Hong Kong.

To underscore its importance, the Central Bank of Nigeria recently introduced non-interest guidelines meant to provide facilities without interests to boost critical sectors like Agriculture, MSMEs, and Information Communication Technology (ICT) and so on.

The CBN said the initiative was for non-interest financial institutions under its Agri-Business, Small and Medium Enterprise Investment Scheme (AGSMEIS), Micro, Small and Medium Enterprises Development Fund (MSMEDF), and Accelerated Agricultural Development Scheme (AADS).

According to the guidelines by the apex bank, the framework will integrate non-interest windows in all its intervention programmes aimed at supporting businesses and households that have been impacted negatively by the coronavirus.

It said under the Agri-Business, Small and Medium Enterprises Investment Scheme (AGSMEIS) for Non-Interest Financial Institutions (NIFIs), there will be creation of a Fund to be known as ‘AGSMEIS Non-Interest Fund’ to be domiciled in a dedicated account with the CBN.

The guidelines stipulated that each Non-Interest Deposit Bank full-fledged or window is to set aside five per cent of its profit after tax annually as contribution to the Fund.


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