The Vice President of policy think tank IMANI Africa, Bright Simons, has expressed strong reservations about the Bank of Ghana’s proposed guidelines for regulating what it terms “Non-Interest Banking,” warning that the framework could introduce legal uncertainty, regulatory risks and an identity crisis for the emerging sector.

In an article responding to the Bank of Ghana’s exposure draft on Non-Interest Banking dated Saturday, December 13, Mr Simons argued that the central bank’s attempt to rebrand Islamic Banking as “Non-Interest Banking” is more problematic than beneficial. He suggested that while the rebranding may be aimed at avoiding religious sensitivities, it fails to reflect the reality that the model is fundamentally grounded in Islamic financial principles.

According to him, the guidelines create a contradiction by banning religious symbols and language while simultaneously requiring compliance with Islamic standards set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). He said this inconsistency could confuse banks, customers, regulators and the courts, particularly in the absence of a dedicated Islamic Banking law in Ghana.

Mr Simons warned that disputes arising from Islamic finance contracts—such as profit-sharing and partnership arrangements—could be difficult for Ghanaian courts to adjudicate, as these instruments are rooted in Islamic jurisprudence rather than Ghana’s statutory or common law traditions.

He also criticised the “window” model that allows conventional banks to offer non-interest products alongside interest-based services. He cautioned that this approach could be abused, enabling banks to benefit from regulatory or tax incentives meant for non-interest banking without fully adhering to its risk-sharing principles.

The IMANI Africa Vice President further raised concerns about gaps in the draft guidelines regarding taxation, deposit protection, liquidity management and capital adequacy. He noted that the framework does not clearly explain how non-interest banks would compete fairly within Ghana’s existing financial and tax systems.

Mr Simons also questioned provisions that prevent non-interest banks from charging late payment penalties, warning that such restrictions could undermine repayment discipline and expose the banks to financial risk.

In conclusion, he cautioned that the proposed framework could result in a non-interest banking system that appears robust on paper but proves unworkable in practice. He urged the Bank of Ghana to adopt a more transparent approach by explicitly introducing Islamic Banking, supported by clear legislation on taxation, bonds, liquidity support and dispute resolution.

Without these reforms, he warned, Ghana’s non-interest banking sector risks becoming ineffective and unattractive to both financial institutions and potential customers.