But wants certain amendments to laws
The Reserve Bank of India has taken a positive approach to the suggestion of an alternative banking system for Muslims, subject to certain laws being amended first, K. Rahman Khan, Minister for Minority Affairs, said here recently.
“I have written to the RBI Governor, invoking Section 25 of the Constitution, saying that it was the duty of the State to facilitate every citizen to practice and follow his/her religion,” he said, adding that Muslims being given no option but interest-based banking amounted to obstruction in practice of religion.
Khan said the RBI Governor had written back accepting his view, but pointing to the need for certain amendments to the laws concerned. The Minister was addressing a session on ‘Islamic Banking and Finance: Global Trends and India’ at a two-day conference organised by the Institute of Objective Studies.
The Minister said, in India the biggest issue was who should regulate the proposed alternative system, as it needed a strong monitoring mechanism. It could be a new law or amendments to the existing law, but I am hopeful of an outcome soon, he added.
At present, about 60-70 per cent of the 200 million Muslims in India are excluded from the conventional banking system (Shariah law prohibits riba (interest)-based financial transactions) because of lack of Shariah-compliant financial instruments.
Khan said Islamic banking had been adopted by 75 countries, including the UK, and added that India could no longer afford to stay away from the $1.5-trillion Islamic financial market, which could even help address the country’s huge fiscal deficit.
However, the Minister pointed out that no concrete effort had been made by the Muslim community in this regard. “Raising a demand alone will not help,” he said, and added that concrete efforts should be made, such as setting up an expert committee to draw up a framework of an alternative banking system, along with a strong legal system to back it.