Sterling Bank Plc has obtained approval-in-principle from the apex bank for the proposed Alternative Bank Limited.
The bank made this known through a notice signed by the secretary, Temitayo Adegoke, and filed with the exchange, stating that the Central Bank of Nigeria had granted it an Approval-in-Principle for a separate license for its non-interest banking business.
This comes after the bank obtained Approval-in-Principle to restructure into a holding company (Hold Co), although still subject to the fulfilment of certain conditions by the Central Bank.
What this means
The Alternative Bank Limited, would act as a standalone non-interest bank, however still a subsidiary under the strategic intragroup restructuring of the bank.
According to the notice, the subsidiary would focus majorly on building partnerships that connect individuals and businesses leveraging technology to create business optimization while solving an individual’s daily financial needs.
In addition, the overall business will focus on social impact, corporate responsibility, and ensure religious compliance in all its dealings.
The Non-Interest Banking window of the bank became operational in January 2014. In 2018, Nairametrics reported that the bank announced it had concluded plans to seek a license for a stand-alone Non-Interest Bank (NIB) from the Central Bank of Nigeria.
The then Managing Director/Chief Executive Officer of Sterling Bank Plc, Mr Yemi Adeola, gave the hint during a visit to the Nigeria Deposit Insurance Corporation (NDIC) management in Abuja, where he said the decision was informed by the feasibility studies conducted by the bank, judging from the potential market and financial resources of customers expected to embrace NIB.
What you should know about non-interest banking
- Non-Interest Banking, NIB, is synonymous with Islamic banking. It refers to an alternative form of banking contrary to the well-known conventional banking in significant aspects.
- This type of alternative banking operates on some defining principles in Islamic Commercial Law such as interest prohibition (riba) in exchange contracts; the prohibition of uncertainty or speculative behaviour (gharar) in business transactions; the prohibition of any form of gambling (maysir).
- Furthermore, it also prohibits funding unethical concerns such, alcohol or tobacco, or ammunitions manufacturing and adult entertainment institutions; just to mention a few.
Sterling Bank Plc is a full service national commercial bank licensed by the Central Bank of Nigeria. The bank provides services to individuals, small businesses (SMEs) and large corporations. As of December 2016, the bank’s branch network numbered 187, distributed throughout the country.