List of Islamic and Non-Interest Banks in Nigeria

Islamic banking or non-interest banking operates on ethical or Islamic principles including interest prohibition in debt and exchange contracts. 

It also prohibits funding of unethical ventures such as, alcohol, tobacco, ammunition manufacturing and adult entertainment institutions and also prohibits any form of gambling.

Islamic banking operates in profit and loss sharing basis. In essence, Islamic banking operates in accordance with Sharia law, which prohibits usury and speculations. So if your faith does not encourage interest payments, these banks are ideal for you and your business. Read further on advantages and disadvantages of Islamic and Non-interest Banking.

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There are about four (4) Islamic or non-interest banks in Nigeria. They are:

  • Jaiz Bank
  • Taj Bank
  • Lotus Bank
  • Alternative Bank Ltd

Jaiz Bank

Jaiz Bank is the pioneer Islamic and non-interest banking in Nigeria. the bank`s products and services in regards deposits and investments comply strictly with Shaira law.

Address: Kano House, No 73 Ralph Shodeinde Street, Central Business District, Abuja


Taj Bank

Taj Bank is a non-interest bank but adopts profit sharing. The bank operates a high ethical standard, and gives its customers an outstanding service in a new partnership approach to banking.

Address: Plot 72 Ahmadu Bello Wat, Central Business District, Abuja


Lotus Bank

Lotus Bank started operation in July 2021, is a non-interest bank.

According to the Founder and Managing Director of the bank, Mrs. Kafilat Araoye, the bank`s values are deeply rooted in partnership. A critical component of its mission is the provision of innovative solutions that drive ethical prosperity for all stakeholders. Lotus Bank prides itself on digital solutions that provide its customers with the convenience of unlimited access to its services and products.

the banks products and services include non-interest business financing, deposit products (current, savings and investment accounts), and personal financing.

Address:  30A Adetokumbo Ademola Street, Victoria Island, Lagos


Alternative Bank Ltd

Alternative Bank Ltd is a subsidiary of Sterling Bank PLC.

Sterling Bank Plc has received the Central Bank of Nigeria‘s (CBN) Approval-in- Principle for a stand-alone license for its non-interest banking business. The bank will comply with Islamic principles in its dealings. Before receiving CBN’s approval to operate a stand alone non-interest banking, Sterling has been offering Islamic or non-interest banking services such as Mudaraba, partnership etc under Sterling alternative Bank. With the approval, it can now operate as a full fledge bank.

Address: 20 Marina Street, Lagos Island, Lagos


Islamic Financing

Isamic finance (halal or halaal finance) is a system of banking, lending and borrowing money that is in accordance with the principles of Islamic or sharia law.

The principles  the avoidance of riba and usury. In other words, it forbids lender from charging interest on any amount borrowed, and from funding businesses engaged in things like alcohol, betting etc.

Benefits of Islamic finance

Interest free (no interest to pay)

Promotes financial justice — risks and rewards are shared

Financial inclusion — encourages un-banked Muslims to benefit from finance

Reduces impact of harmful practices — alcohol, betting etc.

Promotes financial stability — less risk and more stable returns

Accelerates economic development — an alternative form of financing

Limitations of Islamic finance

High costs — as documentation is often tailor made to the transaction

Longer application processes — Islamic banks do more due diligence

No many Islamic finance providers

Types of Islamic Finances

  • Profit-and-loss sharing joint venture (musharakak)
  • Leasing (Ijarah)

Profit-and-loss Sharing Joint Venture (Musharakah)

Musharakah is a form of a joint venture where all partners contribute capital and share the profit and loss on a pro-rata basis. The major types of these joint ventures are:

Diminishing partnership: This type of venture is commonly used to acquire properties. The bank and investor jointly purchase a property. Subsequently, the bank gradually transfers its portion of equity in the property to the investor in exchange for payments.

Permanent musharkah: This type of joint venture does not have a specific end date and continues operating as long as the participating parties agree to continue operations. Generally, it is used to finance long-term projects.

Leasing (Ijarah)

In this type of financing arrangement, the lessor (who must own the property) leases the property to the lessee in exchange for a stream of rental and purchase payments, ending with the transfer of property ownership to the lessee.

Investment Vehicles

Due to the number of prohibitions set by Sharia, many conventional investment vehicles such as bonds, options, and derivatives are forbidden in Islamic finance. The two major investment vehicles in Islamic finance are:


Sharia allows investment in company shares. However, the companies must not be involved in the activities prohibited by Islamic laws, such as lending at interest, gambling, production of alcohol or pork. Islamic finance also allows private equity investment

Fixed-income Instruments

Since lending with interest payments is forbidden by Sharia, there are no conventional bonds in Islamic finance.

However, there is an equivalent of bonds called sukuk or “Sharia-compliant bonds.” The bonds represent partial ownership in an asset, not a debt obligation.

Ikechukwu Evegbu

Ikechukwu Evegbu is a graduate of Statistics with over 10 years experience as Data Analyst. Worked with Nigeria's Federal Ministry of Agriculture and Rural Development. A prolific business development content writer. He's the Editor, Business Compiler

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