In a major development today in efforts to start Islamic Banking
system in India, Union Finance Minister Pranab Mukherjee assured a
delegation of Indian Centre for Islamic Finance that he would soon
discuss the feasibility of interest-free Islamic banking system in
India with Reserve Bank of India Governor.
To discuss about the feasibility of
interest-free Islamic banking in India, a delegation headed by H
Abdur Raqeeb, General Secretary, Indian Centre for Islamic Finance (ICIF),
New Delhi, met Pranab Mukerjee today at his home in Kolkata, and
submitted a memorandum to him.
After meeting with Mukherjee, Abdur
Raqeeb told TCN: “The Finance Minister went through the 3-page
memorandum and keenly read the recommendations of Raghuram Rajan
committee on Financial Sector Reforms - CFSR recommendations on
Interest-free banking which says: the Committee recommends that
measures be taken to permit the delivery of interest-free finance on
a larger scale, including through the banking system.
This is in consonance with the
objectives of inclusion and growth through innovation. The Committee
believes that it would be possible, through appropriate measures, to
create a framework for such products without any adverse systemic
He noted down that Interest-free
Banking is not only for Muslims but for all. In Malaysia 40%
customers are Chinese, who are Non-Muslim and In Britain 20% of
customers are Non-Muslims. He also noted Vatican has recommended
Islamic finance to western Banks for its emphasis on ethical
investments and being socially responsible investment and an
alternative to the conventional banking.
Finance Minister was informed about
the decision of the Government of Kerala which had launched an
Islamic investment company with Rs.1000 crore after the feasibility
report of Ernst & Young and has plan to turn it to a Global Islamic
bank after prevailing upon RBI to amend its Banking regulations.
Among the five options provided in the
memorandum (Options of GOI) issuing directions and administrative
guidelines, creating a subsidiary and going for an Act of Parliament
also attracted his attention and he took note of it.
“FM said that he is going to meet RBI
governor next week and will discuss with him on this issue. He also
said that he will be visiting Saudi Arabia and will be available in
the second week of November and then a meeting can be arranged with
the secretaries and officials of Banking Department of Finance
Ministry to interact with ICIF,” Abdur Raqeeb said.