More on Ummid: International l National Regional l Politics Business Religion l History l Culture l Education



Fake Dubai princess with three accomplices arrested in Punjab

108-yr old Malaysian woman back with 38-yr old hubby

Pakistan reconciles after war of words

Kalam stresses on R&D in educational institutions

One more Fatwa, this time against girls riding bicycle

School on Gandhian ideology fails to compete English medium schools

Taj voted most popular Asian destination

Ishrat case: SIT submits probe summary report to HC


Plot to kill V-P: Cong demands action, Mob vandalizes TV Channel: Even as hundreds of suspected Sangh Parivar  ..... Read Full

Protest near channel office, at the behest of VHP leaders: Report

Govt. contemplating amendments in Right to Education Act?: If the reports published in part of the ..... Read Full

RTE, actually a law to ‘Eradicate Education’: Wali Rahmani


Pakistan reconciles after war of words: Pakistan appears to have piped down on Saturday after two days of acrimony with India with its leaders saying it .... Read Full

Taj voted most popular Asian destination: Taj Mahal, one of the Seven Wonders of the World, is grand winner of the voter's choice for most popular   .... Read Full

Krishna expresses satisfaction, but Pakistan slams India's 'selective' approach: Even as Indian Foreign Minister SM Krishna expressed   .... Read Full

Kill the Ground Zero Mosque: Video: Hatred against Islam is growing among some US citizens. Two US TV networks have refused to air a controversial .... Read Full



India unveils symbol for its rupee: India's rupee has joined the ranks of the dollar, the pound, the euro and the yen: It now can be designated with a symbol. After .... Read Full

Number of Indian mobile users to touch 993 mn by 2014: Gartner:  The country's mobile subscriber base is expected to touch 993 million by 2014, led by the  ..... Read Full

Gujarat: Making of a Fascist State: Abdul Shakeel Basha, known popularly as Shakeel to his friends, has been arrested on 17th June 2010, on various charges. The ...... Read Full

Positive developments in Indo-Pak talks: Talks between External Affairs Minister S M Krishna and his counterpart Shah Mahmood Qureshi were  .... Read Full

US reiterates disagreement with France on veil ban: US officials has reiterated Washington's disagreement with a measure approved by the ..... Read Full

Hindus in Sindh attacked after boy drinks from mosque cooler: Several members of the minority Hindu community were attacked and forced out of their  ..... Read Full


Can India afford to ignore Islamic banking?

Saturday, July 17, 2010 08:39:35 PM, Raza Elahi

‘Don’t let the name scare you. Islamic banking is beneficial for all': "People should know that the name Islamic Banking is used just to give an impression that it works on the Islamic principles ....Read Full

'Islamic finance puts emphasis on equity and justice'

'When London, Singapore and Tokyo can have Islamic banks, why not India?'

The recent statement of MS Swaminathan, the father of green revolution in India, that Islamic banking can be a solution for farmers’ suicide in Vidarbha is apt reply to those opposing it tooth and nail by terming this banking system as anti-economic growth.

It is truth, nothing but truth, that exorbitant lending rates charged by moneylenders have created a vicious cycle of debt and suicide not only in Vidarbha, but also in several parts of the country. Islamic banking, which propagates zero-interest lending, can solve not only farmers’ suicide crisis but will also fill the gap between financially-excluded and financially-included classes of the country. In 2008, Raghuram Rajan Committee recommended interest-free banking in the country to encourage financial inclusion, but nothing much has been done in this direction. The initiative taken by the Kerala government in this regard is sub judice.

The financially-excluded class, which includes small farmers, landless labourers, self-employed, minorities and women, forms around 60% of the country’s population. They do not have access to formal banking. They find it difficult to meet the demand of pre-determined interest rates. If finance is available without the burden caused by pre-determined interest rates, it will be a far-reaching implication for the socio-economic and educational uplift of the masses.

The main objective of Islamic finance is to create a society of investors, unlike the conventional banking system, which has made and created the society of borrowers and lenders from the past 800 years. Islamic banking regards the public interest above all other motives. According to the Islamic banking concept, the banks involve themselves in real time trading or investment activities with their customers based on various contracts like Mudarabah (partnership), Musharaka (joint venture), Murabaha (cost-plus), Ijara (leasing) and some hybrids combining two contracts (Musharaka Mutanaqisa) etc, and therefore earn profit. All the products that these banks offer are Sharia-compliant. A Sharia board decides or monitors what sort of investments the banks can make.

Furthermore, Islamic banking in India will not only be beneficial for the marginalised and the minorities in terms of microfinance, but can also attract major investment from the Gulf countries. The UK and France have made necessary regulatory changes in order to attract these investments.

Islamic banking industry, which is operating for the past 30 years in the Middle Eastern countries, has gained popularity and curiosity around the globe during the financial crisis of 2008. Despite the financial turmoil that crippled so many large Western institutions, Islamic banks continued to grow in prominence and size.

According to a survey conducted by The Asian Banker, a Singapore-based publication last year, the combined assets of world’s 100 top Islamic banks increased 66% in 2008, bucking the trend of slow growth in other markets. Asia’s 300 largest banks, for example, only grew assets 13.4% in the same period. Now, many financial experts are seeing Islamic banking as an alternative to the conventional banking system, which is based on stronger regulatory regimes and a better international understanding of its dynamics.

It is a misconception that Islamic finance is just a Muslim-only affair. For all the Shariah-compliant products sold in countries such as Malaysia, around 40% of clients are non-Muslims. Around 20% customers of Islamic banks in Britain are non-Muslims. Manfred Dirrheimer, chairman of the executive board, FWU AG, a German financial services company, recently told Arab News, “For all the Shariah-compliant products we sell in countries such as Malaysia, some 70% of our clients are non-Muslim."

In India, SEBI has permitted Shariah-compliant financial products such as mutual funds, but still many steps, including necessary banking regulatory changes, are required to establish full-fledge Islamic banking in the country. The delay, it seems, is a bit longer. When London, Tokya Singapore and Hong Kong could become hub and house of Islamic finance, then why not Delhi, Mumbai, Chennai or Cochin?

The writer is senior journalist based in Delhi

The article was originally published on the writer’s blog.




  Bookmark and Share

Home | Top of the Page

  Comment on this article


E-mail Address:

Write here...







 Home | Contact Us | Disclaimer | Terms of Use | About Us | Feedback

Ummid Business: Advertise with us | Careers | Link Exchange is part of Awaz Multimedia & Publications providing World News, News Analysis and Feature Articles on Education, Health. Politics, Technology, Sports, Entertainment, Industry etc. The articles or the views displayed on this website are for public information and in no way describe the editorial views. The users are entitled to use this site subject to the terms and condition mentioned.