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Stating that Islamic finance offers advantages like lower bad loans, an arm of Islamic Development Bank (IDB) on Monday said it will impress upon the RBI to introduce the alternate way of finance in India.
“We would like to understand their views on Islamic finance in general and if they feel it is applicable to India, we would be very happy to support it. We can see how we can collaborate,” Khaled Mohamed Al-Aboodi, Chief Executive of the IDB’s private sector arm, Islamic Corporation for the Development of Private Sector (ICD), told reporters here.
Stating that he is meeting the RBI officials during his visit and would discuss the issue with them, Al—Aboodi said the “collaboration” can be on making the apex bank understand the concept and benefits of Islamic finance.
He said the problem of bad loans is very minimal in Islamic finance because the bank, which owns the collateral ’loaned’ to the borrower, works as a partner rather than as a financier alone.
Helping small business
Islamic finance can also help the small businesses and is of help from the stability perspective, he said, adding this stream of finance was unaffected by the 2008 global credit crisis.
“I think it will be beneficial to the economy...It will help social exclusion, SME sector. It will add value to economy and the country,” he said, adding it is for the regulator to decide on introducing this system.
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