The Hindu Business Line : ‘Islamic Banking will facilitate faster fund flow’

New Delhi, Sept. 1 The Government, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and banking industry must come together to introduce participatory banking (popularly known as Islamic banking) through necessary legislative and regulatory measures.

This was one of the three main points that featured in the resolution passed at the end of the two-day international conference on ‘Participatory Banking for All: A Business Proposition’ here on Saturday.

Briefing newspersons about the deliberations of the conference, Mr K. Rehman Khan, the Deputy Chairman of Rajya Sabha and Chairman of Managing Committee of the conference, said that the resolution also called for necessary institutional and regulatory framework to attract foreign direct investment (FDI) from the Islamic financial market.

Market worth

The Islamic Financial Market, based on participatory principles, was now of the order of $700-$ 800 billion, growing at an annual rate of 10-15 per cent. In the next decade, it is estimated to be about $2-3 trillion.

The international conference has urged the Government, RBI, SEBI and the banking industry to provide a viable alternative for the 150 million Muslim citizens in the country to invest their savings in tune with their religious faith by establishing regulatory mechanism for establishment of participatory banks in India.

The resolution also stated that approval given to Islamic financial products like ‘sukuk’ (Islamic bonds) will facilitate large inflows of funds into India seeking Islamic ventures for profitable investment.

It has highlighted that the country can benefit by attracting large funds from the Islamic financial market and that India needs huge and faster investment for its infrastructure to maintain the current pace of growth.

While the Islamic faith directs Muslims not to take or pay interest, it was being submitted that participatory banking would help fulfill Islamic obligations and meet the aspirations of a large section of Indian citizens.

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