Clearing the air and ignoring the pressure of Gulf money, the Reserve Bank of India (RBI) has decided not to pursue a proposal for introduction of Islamic banking in the country. RBI in a response under Right To Information (RTI) filed by a journalist from PTI said that the decision was taken after considering “the wider and equal opportunities” available to all citizens to access banking and financial services. Islamic or Sharia banking is a financial system based on the principles of not charging interest, which is prohibited under Islam.
Though the move was blocked by Swamy’s petition, hectic lobbying to open Islamic Banking continued. The latest was from Zafar Sareshwala, BJP supporter from Gujarat but it was shot down by none other than Modi.
The issue of introduction of Islamic banking in India was examined by the RBI and the government of India, it said. “Taking into account, the wider and equal opportunities available to all citizens to access banking and financial services, it has been decided not to pursue the proposal further,” the central bank said in its reply to the RTI application
The move to open Islamic Banking was first started in Kerala. This was shelved after BJP leader Subramanian Swamy approached the High Court in 2009 and forced RBI to stop the application filed by Dubai based industrialists.
Though the move was blocked by Swamy’s petition, hectic lobbying to open Islamic Banking continued. The latest was from Zafar Sareshwala, BJP supporter from Gujarat but it was shot down by none other than Modi.
During Raghuram Rajan’s tenure in late 2014, RBI even approved State Bank of India’s Mutual Fund like proposal called Sharia Funds. Due to Swamy’s complaint, it was cancelled under stern directions from Narendra Modi.
In late 2008, a committee on Financial Sector Reforms, headed by former RBI governor Raghuram Rajan, had stressed on the need for a closer look at the issue of interest-free banking in the country.
“Certain faiths prohibit the use of financial instruments that pay interest. The non-availability of interest-free banking products results in some Indians, including those in the economically disadvantaged strata of society, not being able to access banking products and services due to reasons of faith,” the committee had said.
Later, on the instruction of the central government, an inter-departmental group (IDG) set up in the RBI examined the legal, technical and regulatory issues for introducing interest free banking in India and has submitted its report to the government. The RBI had in February last year sent a copy of the IDG report to the Finance Ministry and recommended an “Islamic window” in conventional banks for gradual introduction of Sharia-compliant banking. In our considered opinion, given the complexities of Islamic finance and various regulatory and supervisory challenges involved in the matter and also due to the fact that Indian banks have no experience in this field, Islamic banking may be introduced in India in a gradual manner.
Now with the latest response from RBI, it is now certain that Islamic Banking is not permitted in India and Raghuram Rajan’s proposal backed by the Gulf countries based money launders is thrown to dustbin.
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[…] because ‘interest free banking is prohibited by certain faiths’. This proposal was later scuttled by the central […]
[…] Indian government was also under huge political pressure from Hindu groups that were apprehensive of Islamic banking — given its link to terrorism […]
You cannot really stop Islamic Banking. It has been around for decades. Infosys first Bankin priject in Bangalore in the 1990s was for an Islamic Bank in Bangalore.
Whether a Bank chooses to charge interest on loans or pay interest on deposits is a matter of business choice.
I hope our Government comes down on Participatory Notes & ensures money entering onto Stock markets is also cleaned up
I am not Pro Islamic banking But it will be good to state in what way that is bad to India Without any facts, it this article treats its readers like idiots
well, Islamic “interest free” loans can be used as a conversion tool against ignorant hindus who are looking for “interest free loans”
Would RBI approved TTD Temple Trust Banking from Tirumala, Tirupati OR Padmanabhaswamy Temple Trust in Tiruvananthapuram Kerala. They both have huge gold reserves to back up loans credit to consumers etc.
If it was a move by Mr.Swamy it definitely has to be appreciated….
Congress only thinks of their immediate gains in crores and not about the future of India in the years to come…
Thanks to Modi for taking a stren step against this ….
Wish there were many more Swamy’s (nothing seems to escape this man) and Modi’s for India to prosper….
Malar, reason behind Modi’s visit to gulf countries is to bring fund to India to help Indian economy. I humbly invite you to study what is Islamic Banking and educated people like you will appreciate it ( its not importing RPG, and Arms. Arms dealers carefully playing their games to misguide the world). I dare say !!!!!!! I dare say…..Islamic banking is coming not today will come tomorrow.
It may be the hidden agenda of former RBI Governor. Thanks to UPA especially Dr Manmohan singh for his 3 year term.
What if Dr. Swamy had not opposed such dubious man R3.
India has been the proud proponent of वसुधैव कुटुम्बकम, which means that whole world is a huge family because the Supreme Father is one. This country is falling into the trap of caste and religion in almost everything. We must stick to our spiritual mission of universal brotherhood and peaceful coexistence.
Sir, can you cite or attach sources to strengthen your points?
Can someone estimate the amount secularist pocketed from middle east and US to make Islamist and christian agenda piggyback on secularism?
No point in estimating. You have to treat that money as black money and confiscate it from them. Let these idiots work hard for their livelihood like the rest of us or beg in the streets.
Why do brown coolies have dhimmi hood in their DNA?