What are Islamic Banks? List of Islamic Banks in Nigeria: Their Origin, Growth, and Details

Islamic banks are financial institutions that operate according to Islamic law, or Shariah. Shariah prohibits the charging or paying of interest, which is considered to be usury. As a result, Islamic banks use a variety of financial instruments that are compliant with Shariah.

Islamic banks have been growing in popularity in recent years, and there are now Islamic banks operating in over 70 countries. In this article, we will talk about everything you need to know about Islamic banks, their origin, growth, and details. 

So, join me as we uncover the details in full. 

What Are Islamic Banks 

Islamic banks, also known as Sharia-compliant banks, are financial institutions that operate in accordance with Islamic principles and guidelines. These principles are derived from Islamic law, or Sharia, which emphasizes ethical and moral standards in all aspects of life, including financial transactions.

Unlike conventional banks, which operate based on interest-based transactions, Islamic banks adhere to a set of principles that promote fairness, transparency, and social responsibility. Some key principles that distinguish Islamic banking include:

  • Prohibition of Interest (Riba): Islamic banking strictly prohibits the charging or payment of interest on loans or deposits. Instead, profits are generated through ethical and productive means, such as profit-sharing, equity participation, and fee-based services.
  • Risk-Sharing (Mudarabah): Islamic banks emphasize the concept of shared risk between the bank and its customers. In certain arrangements, the bank and the customer share both profits and losses resulting from investments or business ventures.
  • Asset-Backed Financing: Transactions in Islamic banking are typically backed by tangible assets or real economic activities. Loans must be linked to specific assets or projects to ensure a tangible basis for financial transactions.
  • Prohibition of Speculative Activities (Gharar): Islamic banking discourages transactions that involve excessive uncertainty or ambiguity. Contracts must be clear and specific to avoid undue speculation.
  • Ethical Investment (Halal and Haram): Islamic banks avoid engaging in businesses or investments that are considered unethical or prohibited under Sharia law, such as alcohol, gambling, and pork-related activities.

Islamic banks offer a range of financial services, including savings and current accounts, investment accounts, home financing (known as Islamic mortgages), trade financing, and more. These services are designed to cater to the financial needs of individuals, businesses, and communities while adhering to Islamic principles.

The growth of Islamic banking has been significant in many countries with sizable Muslim populations. It provides an alternative banking system that resonates with the values and beliefs of individuals seeking financial solutions aligned with their faith.

It's important to note that the specific practices and offerings of Islamic banks can vary from one institution to another and from one country to another, based on interpretations of Sharia law and local regulations.

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List Of Islamic Banks In Nigeria: Their Origin, Growth, And Details

Below is the list of Islamic banks in Nigeria, including their origin, growth, and details. 

Jaiz Bank Plc:

  • Origin: Jaiz Bank Plc, founded in 2003 as Jaiz International Plc, paved the way for Islamic banking in Nigeria. Its transformation into Jaiz Bank Plc in 2011 solidified its commitment to providing Sharia-compliant financial solutions.
  • Growth: Jaiz Bank's growth trajectory is marked by its evolution into a leading Islamic bank in Nigeria. Its pioneering efforts and adherence to ethical banking practices have enabled the institution to expand its presence, establishing itself as a reliable source of faith-based financial services.
  • Details: Jaiz Bank's service portfolio spans various domains, including savings and current accounts, trade finance, corporate banking, and Takaful products. Its offerings cater to diverse financial needs while aligning with Islamic principles, making it an attractive choice for those seeking an alternative to conventional banking.

Stanbic IBTC Bank Plc:

  • Origin: Stanbic IBTC Bank Plc, a subsidiary of Standard Bank Group, commenced operations in Nigeria in 1989. It embraced Islamic banking principles through its dedicated Islamic Banking division.
  • Growth: With its extensive experience in the Nigerian financial sector, Stanbic IBTC has expanded its reach by integrating Sharia-compliant products and services into its offerings, further diversifying its client base.
  • Details: Stanbic IBTC's Islamic Banking unit specializes in Islamic financing, investment products, and asset management adhering to Sharia principles. This allows customers to engage with a renowned financial institution while adhering to their faith-based beliefs.

SunTrust Bank Nigeria Limited:

  • Origin: SunTrust Bank Nigeria Limited obtained its banking license in 2015, entering the financial arena as a commercial bank. It later introduced Islamic banking windows.
  • Growth: SunTrust Bank's introduction of Islamic banking windows underscores its dedication to serving clients seeking Sharia-compliant financial services.
  • Details: The bank offers Islamic banking products such as Murabaha and Mudarabah accounts. This makes it a unique player, providing both conventional and faith-based solutions to cater to diverse customer needs.

TajBank Limited:

  • Origin: TajBank Limited received its banking license in 2019, positioning itself as a newcomer in the Nigerian banking scene.
  • Growth: Despite being a newer entrant, TajBank has been resolute in its commitment to Islamic finance principles, setting the stage for potential growth and influence in the Islamic banking sector.
  • Details: TajBank offers a range of Islamic financial products and services, including savings accounts, investment accounts, and trade finance. Its emergence signifies the continued evolution of Islamic banking options within Nigeria.

Coronation Merchant Bank Limited:

  • Origin: Coronation Merchant Bank Limited, established in 2015, holds a prominent position among Nigeria's merchant banks.
  • Growth: By introducing an Islamic banking subsidiary, Coronation Capital, the bank demonstrated its commitment to meeting the demand for Sharia-compliant financial services.
  • Details: Coronation Capital specializes in Islamic finance solutions, including Sukuk issuance and structured finance deals. This strategic expansion further enriches the Islamic banking landscape in Nigeria.

These Islamic banks collectively contribute to Nigeria's financial sector by providing a diverse array of Sharia-compliant financial products and services. Their unique origins, growth trajectories, and offerings cater to the diverse needs of individuals and businesses seeking ethical and faith-based banking solutions.


What is the growth rate of Islamic banks?

The growth rate of Islamic banks has been significant in recent years. According to the Islamic Financial Services Board, the assets of Islamic banks grew by 13.4% in 2023. This growth is being driven by a number of factors, including the increasing awareness of Islamic finance, the growing Muslim population, and the government's support for Islamic finance.

What is the history of Islamic banks in Nigeria?

The history of Islamic banks in Nigeria dates back to the early 2000s. Jaiz Bank Plc, established in 2003 as Jaiz International Plc and later rebranded to Jaiz Bank Plc in 2011, is often considered the pioneer of Islamic banking in Nigeria. Since then, other Islamic banks like Stanbic IBTC Bank's Islamic Banking division, SunTrust Bank with Islamic banking windows, TajBank Limited, and Coronation Capital (a subsidiary of Coronation Merchant Bank) have emerged to offer Sharia-compliant financial solutions.

What is the origin of Islamic banking?

 The origin of Islamic banking can be traced back to the teachings of Islam, particularly the prohibition of Riba (interest) and the emphasis on ethical and equitable financial transactions. The concept of Islamic banking is rooted in Islamic principles, where financial activities are conducted in accordance with Sharia law. Modern Islamic banking institutions have evolved to provide financial services that align with these principles.

Which Islamic banks are in Nigeria?

 Several Islamic banks operate in Nigeria, catering to the financial needs of individuals and businesses seeking Sharia-compliant options. Some prominent Islamic banks in Nigeria include:

  • Jaiz Bank Plc
  • Stanbic IBTC Bank (Islamic Banking division)
  • SunTrust Bank Nigeria Limited (with Islamic banking windows)
  • TajBank Limited
  • Coronation Capital (a subsidiary of Coronation Merchant Bank)

Who started Islamic banking in Nigeria? 

Jaiz Bank Plc is widely recognized as the institution that pioneered Islamic banking in Nigeria. Established in 2003 as Jaiz International Plc and later rebranded to Jaiz Bank Plc in 2011, it marked the beginning of Sharia-compliant banking options in the country. Jaiz Bank's inception set the stage for the growth and development of the Islamic banking sector in Nigeria.


In conclusion, Islamic banks are financial institutions that operate according to the principles of Islamic law, or Shariah. Shariah prohibits the charging or paying of interest, which is considered to be usury. As a result, Islamic banks use a variety of financial instruments that are compliant with Shariah.

There are currently four Islamic banks operating in Nigeria: Jaiz Bank, Sterling Bank, Unity Bank, and First Bank of Nigeria. These banks offer a variety of Islamic financial products and services, including savings accounts, investment accounts, and mortgage loans.

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