It is not uncommon for right-wing organizations to be unjustly accused of trying to divide the people on religious lines. However, when a central agency like the Reserve Bank of India, starts thinking along similar lines, one is forced to question the “secular” nature of such agencies and the unbiased outlook of its leaders. An RBI panel headed by Deepak Mohanty placed a report titled “Report of the Committee on Medium-term Path on Financial Inclusion”. One of the recommendations was to enable commercial banks to open special windows to offer interest-free deposits and advance. This is the primary requirement for Shariah banking which prohibits acceptance of specific interests as they are classified as haram i.e. sinful and prohibited.
This is not the first attempt to bring Shariah banking practices to India.
Back in 2007, an RBI appointed working group under the then executive director, Anand Sinha was setup to study this in further detail. They had ruled out Islamic banking in the country, saying current regulations do not permit the model.
State Bank of India in December 2014 announced the launch of an SBI Shariah fund, a Shariah-compliant equity mutual fund. An objection raised by BJP leader Dr. Subramanian Swamy resulted in the plan being shelved. Official reason for the deferral was “commercial considerations”.
As per the legal opinion of Dr. Subramanian Swamy, who had tweeted his objection, Shariah banking cannot be implemented in India without amending the Reserve Bank of India Act, 1934 by the Parliament.
Goldman Sachs Asset Management Company in India has been running GS Shariah BeES ETF since its entry into the Indian mutual fund market since 2011. This ETF is highly illiquid and is not traded for many days at a stretch.
So, what next?
It’s been 69 years since India’s independence and over 80 years since the RBI came into existence. How has the Muslim community been banking? I refuse to believe that they have only been dealing in cash for so many decades. Is the RBI trying to say that the primary reason for this community to avoid the formal banking system has been lack of Shariah banking? 20 crore (200 million) bank accounts were opened as part of the Pradhan Mantri Jan-Dhan Yojana. Why not publish statistics on the demographic breakup of these new account holders in addition to the existing ones to prove with facts before recommending a policy?
What about Muslims living in countries with Uniform Civil Code like Australia, USA and Europe?
Are they not part of the formal Uniform Banking system?
Are they demanding for Shariah Banking in these countries?
Has any country with a non-Muslim majority allowed Shariah Banking?
Do Middle Eastern businessmen who would be using Islamic banks in their home country not invest in countries without Islamic banks?
Do these Islamic Banks themselves never deal with international banks?
If an independent businesswoman wants to start a new business, say a small boutique shop. Will an Islamic Bank provide her with seed capital?
Will they provide any Muslim women loan for business or property purchase?
These are a few basic questions which RBI and the “green” lobbyists will need to answer before any formal request can be considered. Given that this change would need a parliament approved amendment of the RBI Act, will this see the light of day anytime soon?
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