Though admitted that efforts are indeed on in India "to
accommodate" the Islamic Finance System, Dr Shariq Nisar says,
problem is that the Prime Minister Dr Manmohan Singh does not
advocate the system in the country with the same enthusiasm with
which he supports it during his visits abroad.
"We heard Dr Manmohan Singh
supporting the Islamic Finance System and acknowledging its
benefits during his visit to Malaysia. But the determination with
which the prime minister had made this statement was missing when
he returned back to India", Dr. Shariq Nisar, one of the senior
most professionals of Islamic Finance in India, said in reply to a
question during a seminar on interest-free system January 15.
Dr Shariq Nisar, Director of Research and Operations of India’s
premier shariah advisory firm TASIS was in Malegaon on
Sunday to address a seminar on "Prospects of Islamic Finance in
India". He was referring to the statement made by Dr Manmohan
Singh during his visit to Malaysia in October 2010.
Prime Minister Dr Manmohan
Singh at a joint press interaction with his Malaysian counterpart Najib Tun Razak on October 27, 2010
had said, "I will certainly recommend it to the RBI to look at what is
happening in Malaysia in this context. RBI is already looking into
the question if India should allow Islamic banking."
In an apparent reference to this
statement, Dr Shariq Nisar said, "The prime minister had also
promised to recommend to the Reserve Bank of India (RBI) to look
at what is happening in Malaysia in this context (Islamic Finance
"He also admitted that the RBI was already looking into the
question if India should allow Islamic banking. But more than a
year after this statement, we are still unclear about what RBI is
doing in this regard."
The Islamic banking system is an interest free system in
accordance with Sharia laws. Several Islamic banks in around 57
countries including United States, United Kingdom and France are
running successfully. The Islamic Banks of the Middle East have in
fact asked the Indian government to start the system on an
Efforts to establish a financial
corporation is on in Kerala since last couple of years. Earlier
the project received setback when Subramaiun Swamy, a known Muslim
critic, filed against the move. The court however later rejected
his petition. Newly elected Kerala Chief Minister Oomen Chandy
immediately after taking oath of the office had expressed the
commitment to establish the Islamic Finance Corporation in the
Earlier while speaking to ummid.com,
Dr Shariq said that taking advantage of the situation arising out of the economic crisis in Eurozone
and countries like United States, India should adopt the Islamic
Finance System to pump-in investments from the Middle East. This
interest-free and more inclusive system will in turn speed-up the
financial inclusion of the Indian Muslims.
"The Global Economic Crisis in the West is forcing investors to
search for secure places of investment. Creating a situation which
is suitable for such investors especially those from the Middle
East can pump in huge investment in the country. Introduce the
interest-free alternate financial system here and see how the
funds start flowing from the oil-rich countries to India", he
"China and the Middle East are the two areas in the world where
surplus funds more than their requirements are generated. China
will never like to invest in India for the obvious reasons. We do
not have such problems with the Arab World. We can attract the
investors from there by introducing the Islamic Finance in our
country", he said while pointing at the requirements in the
country of reliable and committed investors in stock market, and
banking and insurance sectors.
"And why not, the system is running successfully in more than 75
countries. It has also earned these countries rich dividends. Then
why are we reluctant in taking a decision?", he asked while
listing the countries like United States, United Kingdom, France
and others besides the Muslim countries where Islamic Banking
System is successfully running.
“Almost all the top multinational banks including Standard
Chartered Bank, HSBC, DBS, Barclay and others either have their
full-fledged Islamic banks or have special windows in their
branches - some located in the areas where Muslim population is
negligible”, he said adding, "Singapore has in fact taken the lead
to introduce the system in the Asian sub continent by opening The
Islamic Bank of Asia”.
Linking the Islamic Finance with the empowerment of the Indian
Muslims, he said, "The much sought after Muslim empowerment and
their financial inclusion can also be achieved by bringing in the
system here. For, a vast majority of the community keeps away from
the existing banks merely because they are based on interest."
"The Islamic finance will not only provide them an opportunity of
getting financial assistance, it will also streamline the amount
of funds lying with the Muslims that otherwise don’t flow in the
existing system”, he said while giving the example of Kerala where
efforts are on to utilize in a suitable way an estimated 14000
crore rupees belonging to the Non Resident Indians (NRIs) mostly
of the Gulf.
Interestingly, at the time when Dr
Shariq Nisar was discussing with ummid.com in Malegaon about the
investment opportunities in India from the Middle East, thousands
of kms away Chinese Premier Wen Jiabao on an official visit to
Saudi Arabia was signing agreements related to trade and
investments with Saudi crown prince Nayef bin Abdulaziz Al Saud.