Other States - Rajasthan   

Introduction of Islamic banking sought

JAIPUR: An expert on interest-free Islamic banking has called upon the Union Government to amend the Reserve Bank of India regulations to allow introduction of Islamic banking in the country, offering an option to consumers to try the interest-free model of financial transactions.

H. Abdur Raqeeb, convenor of Jamat-e-Islami Hind’s Islamic Banking Committee who was here to study the scope for a new interest-free fiscal structure, said Islamic banking can provide an alternative system to cater to the needs of the poor through micro-credit.

“A separate window in the [country’s existing] banks giving the Islamic banking option to the people will open up umpteen opportunities for investment, lending, resource mobilisation, partnerships and financial growth of the country,” said Mr. Raqeeb, adding that the equity-based banking would benefit people belonging to all communities.

Pointing out that the demand charters of several private banks calling for permission to begin Islamic banking along with regular banking were presently lying with the RBI, Mr. Raqeeb said trillions of dollars from the West Asian countries were waiting to be invested in India if the proposal was accepted.

Islamic banking, said to be the fastest growing system in the world, lays emphasis on circulation of money in the market and sharing of risks, profits and losses by both the bank and the customer. Mr. Raqeeb said this system had the potential for generating much higher returns on investments than those earned through the conventional interest-based banking.

Mr. Raqeeb – former president of the JIH Tamil Nadu unit – said the proposal did not make any progress after the Union Finance Ministry asked the Planning Commission last year to examine its feasibility. In contrast, Islamic banking has been introduced in countries such as Britain through five private banks and Singapore through BBS Bank. Britain’s Finance Ministry announced after issuing Islamic bonds that London would be evolved as a “gateway of Islamic finance and banking.”

Mr. Raqeeb affirmed that introduction of Islamic banking in India would ensure higher foreign direct investment in infrastructure and other vital areas, strengthening long-term macro investment and boosting the country’s growth rate.

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Introduction of Islamic banking sought

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