RBI should look at Islamic banking afresh: Khurshid

K. R. Srivats
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The Law Minister, Mr Salman Khurshid, said on Thursday that he had written to the Planning Commission and the Reserve Bank of India (RBI) on the issue of Islamic banking.

He said he was quite hopeful that the RBI would look at the issue afresh and soon come up with its views after deciding on the technical issues.

Mr Khurshid said it was difficult to fit in Islamic banking with the existing regulations, as the very concept of debt and equity was very different in Islamic banking.

Non-banking financial institutions are prevalent now and are accepted, but some ambiguities have to be addressed before they can take up Islamic finance, he said.

Interesting, attractive

“Sooner or later, the RBI will come up with a final view. Let me say at this point of time that Islamic banking is an interesting idea, compelling idea, if you look at what France, Germany and UK the are doing. It’s an attractive idea if you look at the sovereign wealth funds of the Gulf region and the fact that we need much more money to finance our infrastructure needs,” he said.

On whether it was doable or feasible in the Indian scheme of things, he said only experts and the RBI had to say. He was speaking to newspersons on the sidelines of an event organised by World Islamic Economic Forum (WIEF) Foundation here. For the first time ever, the international advisory panel of WIEF Foundation met in India.

This meeting discussed the agenda and action plans for the forthcoming 8{+t}{+h} World Islamic Economic Forum slated to be held at Johor Bahru Malaysia on December 4-6, said Mr Ahmad Fuzi Abdul Razak, Secretary-General of WIEF Foundation.

Mr Razak had on Tuesday met the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, to discuss WIEF Foundation and its initiatives.

The issue of Islamic banking also came up for discussion at the meeting, Mr Razak said, indicating that Indian policymakers may look at a policy decision on allowing Islamic banking in India.

(This article was published on July 4, 2012)
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