An Assessment of Halal Certification on Non-Interest Bank Lending Risk Acceptance Criteria in Borno State

Abstract

This paper examines the application of Halal certification on Non Interest Bank lending risk acceptance criteria in Borno state. The paper used primary data in form of structured questionnaire administered to Bank staff. Convenience sampling was adopted for the study. The population of the study is made up of forty-five staff from banks practicingNon interest banking principles according to Islamic jurisprudence. Non-parametric statistics specifically the chi-square was used at 5% level of freedom to test the hypothesis. The findings of the paper revealed that customers are aware of the banks’ lending products and its risk acceptance criteria but they do not key into the halal certification because of its processes, cost and time involved. More so, the study revealed that NIB has created a special windows for clients without certification but subject to the confirmation of the
advisory committee of experts. The study also shows that the key challenges in the application of halal certification is lack of awareness/consumer perception, lack of standardization and legal framework. The paper concluded that the halal certification has a significant synergy with banks risk acceptance criteria in ensuring that it’s financing is Shariah compliant. The paper further
recommends that there is need for adequate awareness, enabling environment should be created to facilitate the entry of more halal certification firms, and synergy among scholars is needed in the areas of issuance of standards.