The Jeddah-based Indian Forum for Interest-Free Banking is to meet Prime Minister Manmohan Singh, seeking changes in laws so as to allow functioning of Islamic banks and financial institutions in the country.

Forum secretary V.K. Abdul Aziz said here that with the country seeking funds for major infrastructure projects, Islamic Finance had the potential to meet the needs of the sector.

When the State looks at massive investments for major infrastructure projects in ports, airports and high-speed rail corridor, he said Shariah-compliant funds would prove beneficial.

Aziz, who was here in connection with the Emerging Kerala investor meet, said that the interest-based economic and banking system was one of the main reasons for the global financial crisis, poverty and instability.

The Shariah-compliant system is being practised in 50 countries and there were more than 300 Islamic banks and financial institutions with assets of around $1.6 trillion.

H. Abdur Raqeeb, general secretary of New Delhi-based Indian Centre for Islamic Finance said interest-free banking is a solution for Kerala's infrastructural problems. Investments are required to build high quality infrastructure, skilled human capital, and technology upgrade and enterprise promotion in order to achieve greater economic growth.

For a number of reasons, the private sector in India is not able to get adequate fund to carry out vital projects. The absence of benchmark rates for raising long-term debt from the market is one of the reasons, he claimed.

(This article was published on September 17, 2012)
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