DOHA: Aiming to mobilise resources from the GCC
states for the proposed mega infrastructure projects, there is a “very strong
possibility” of India taking positive steps to amend the country’s banking
regulatory laws to introduce the Islamic banking system in a full-fledged
manner, before the upcoming parliamentary elections in 2014, said an expert
yesterday.
The existing Banking Regulation
Act (1949) of India hinders the establishment of Islamic banking as it does not
allow banks to operate on a profit-loss basis and forbids murabaha, or, the
buying, selling, or barter of goods.
“I strongly believe India soon will
take some positive steps, either to amend the laws of the Reserve Bank of India
(the country’s central bank) or promulgate ordinance to make way forward to
establish Islamic banking system by 2014,” said Dr Manzoor Alam, President of
Indo-Arab Economic Cooperation Forum, and also an expert of Islamic banking.
Recently the RBI permitted the
Kerala government (a state in south India) to go-ahead to launch a Non-banking
Financial Institution (NBFI) based-on the principles of Islamic finance.
Dr Alam, who has been striving
for over two decades to introduce interest-free banking system in the country,
advocated that participatory banking is the need of the hour to facilitate
foreign investments to generate resources, especially at a time when the
government has approved many ambitious programmes, including Food Security Bill
and mega infrastructure projects, which alone will cost the exchequer over
$50bn.
“I see a political will in the
present government. A couple of years ago, Prime Minister Manmohan Singh announced
in Malaysia at an international conference on Islamic banking to form a
committee to conduct a feasibility study in this regard, and subsequently, the
committee made positive recommendations. However, there is tremendous pressure
on the government from different quarters including right wing political
parties, particularly Bharatiya Janata Party (BJP) to prevent introducing a
system which will not only help the Muslims, but the whole nation,” he
said.
Many think that unless and
until full-fledged Islamic banks are permitted in India, an Islamic finance
sector will find it hard to develop.
However, some analysts suggest
that the RBI’s recent decision with regards to the Kerela government reflects a
significant and positive change in its attitude towards Shariah-based
NBFIs.
Some politicians and private
organisations have been making efforts for years to start Islamic banking in
India, but they have faced strong opposition from bureaucrats and conventional
banking circles. Established in early 1970s over 50 countries have adopted the
system of interest-free banking across the globe.
“The global market
capitalisation of interest-free banking is expected reach over $1.6 trillion by
the end of 2013. And the world’s leading economies such as Japan, the UK and
the USA have already allowed the system and becoming increasingly popular in
other advanced countries. But in India, there is still some misnomer or
misunderstanding that it will help Islamisation of the country,” added Dr
Alam.
Dr Alam also suggested that
there is an urgent need to establish a global regulatory framework, similar to
the Basel-based Bank of International Settlements (BIS), to make the
Shariah-compliant banking more popular and sustainable.
(The Peninsula / 24 Sept 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
No comments:
Post a Comment