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Are the banks in India only for the elites?

Saturday, October 10, 2009 12:09:30 PM, Ghulam Muhammed

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“This financial exclusion (of Indian Muslims) could be because of a certain mindset prevailing in the banking sector, which has categorized Muslims and Muslim dominated areas as ‘negative zones’ (this is documented in the Sachar Report), and also for reasons of faith. “

Purnima S. Tripathi,

Frontline Magazine.


The worst possible example of negative zoning had been identified as deliberate zone off of the Minority/Black housing in Chicago, where private builder had build up a wall to separate the ‘Prime Mortgage’ reality area from “Sub-Prime Mortgage” property area. The recent global economic blow-out was triggered when this sub-prime mortgage area came into the mainstream banking as dubious ‘toxic’ investment. The disastrous result of this racist and communal bifurcation of economy is now for all to observe and take remedial measures.


In India, 15% Muslims have been institutionally discriminated against in all sectors of economy. Nationalized Banking, even with Central government jurisdiction, or possibly because of it, had treated all Muslim majority areas as ‘Negative zones’. While a handful of capitalists ran up a non-performing loan portfolio of about 60,000 Crore rupees some decade back and that was written off by the government, as if giving a Bonus to the capitalist elites, the poor were destined for jails or suicides over petty loans.


The same economic blow-out had brought out Islamic Banking as a more viable as well as ethical banking system, that does not give free rein to the gnomes of the netherworld of spurious financing and investment to play havoc by using novel and imaginative financial products to expand paper credit empire that had to fall on itself as a house of cards.


In India, where its Prime Minister Manmohan Singh, an economist and banker, though with world bank taint, has shown deep commitment to India’s future economic and social development, some media attention is now focused on Islamic. Prime Minister’s attempt to look up deeper into Muslim community’s malaise resulted in the preparation and wide publicity given to Sachar Commission report, that embodies India’s first honest and sincere attempt to study and record the plight of Indian Muslims and had recommended far reaching measures that the present government, under the Prime Minister and Sonia Gandhi as President of Congress Party is now taking up, piece-meal, at different level. A measure step that requires technical as well as political courage is promotion of interest free Islamic Banking which will directly focus on the banking needs of the Muslim community, that partly has itself kept away from the traditional banking due to reasons of its Islamic faith. Islam prohibits interest. No believer will risk his afterlife in hell, by dealing in businesses tainted by interest, gambling and other prohibited financial dealings.


Once Government takes a political decision to allow 15% Indian Muslims to have their own exclusive Sharia regulated banks or banking facilities in any of the number of ways, the new electronic age allows banking to be conducted, Indian Muslims are bound to be attracted to the new option. All sections of their community will benefit, without having to suffer arbitrary discrimination based on religious grounds. If constitution allows freedom of religion, Islamic Banking does come under this fundamental constitutional guarantee of freedom. Any government that by design or default hinders Muslim enjoyment of their full constitutional rights is prime facie guilty of misconduct.


In practical terms, since majority of Muslims are under below poverty line (BPL) existence, Islamic Banking will eliminate their possible exploitation through usurious interests. Islamic products and services are mutually rewarding to both the banker and their clients. This is not a one-sided affair.


It is hoped that Prime Minister Manmohan Singh will open up to possibilities of collaborations with international Islamic Banks, who not only will provide the necessary expertise for establishment and day to day management of Islamic Banking, but could be instrumental in channelizing surplus foreign funds to some of the needy sectors of Indian economy, like infrastructure in power etc.


The recent bold initiatives by the Communist state government of Kerala, primarily opens a non-communal approach to solve an endemic problem of  providing level playing field to one and all without discrimination on the basis of religion, caste, region and language. Congress Party that has won the 2009 Lok Sabha election has full confidence and ability to move promptly to follow up Sachar Committee recommendation, by fine tuning an imaginative legislation to allow Islamic Banking as an model of banking that could focus on poverty alleviation and ethical financial dealings.








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That's very true that Banks are made only for the elites. They not only categorized Muslim dominated areas as "Negative Zones " but also Dalit dominated areas, especially slum dwellers.


Sidharth Ughade (by e-mail)


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