Kenya has made adjustments to its banking sector to let Islamic finance institutions set up and prosper, the governor of the Central Bank of Kenya (CBK) said on Monday.
Njuguna Ndungâu â whose statement was read to a conference in Nairobi â said Islamic finance had the "overwhelming support" of Kenyaâs Muslims and non-Muslims, but as a regulator CBK faced challenges in encouraging the niche market.
The country has two Islamic banks and is seen playing a role in the African expansion of Islamic finance, which caters mainly to customers who follow sharia in banking.
"The Banking Act prohibits wholesale trading and restricts holding land and buildings, while sharia-compliant lending has an element of trading, land and building," Prof Ndungâu said.
Ndungâu said they had adjusted the Banking Act, which requires banks to pay interest on savings accounts as long as they maintain a minimum balance, giving leeway for banks to pay return for sharia-compliant savings products.
âReuters
