Islamic Finance News Uploader ISLAMIC BANKING: A boon for the country

Points of Essence:

* The India Government was urged to amend the Reserve Bank of India regulations to allow Islamic banking for the interest-free model of financial transactions to reach the lower segments of the society in India. This is to coincide with the global developments vis-á-vis Islamic finance.
* India would enjoy higher foreign direct investment in infrastructure and other vital areas, strong long-term macro investment and growth rate if it embarks on Islamic finance.

“Islamic system of banking can surely be a boon for our country as it is for the whole mankind,” said Mr H. Abdul Raqeeb, Convener of Jamaat-e-Islami Hind’s Islamic Banking Committee and member of the organisation’s Central Advisory Council. He also called upon the Union Government to amend the Reserve Bank of India regulations to allow introduction of Islamic banking in the country, offering an option to consumers to try the interest-free model of financial transactions.

Addressing the media persons in Jaipur, he explained, “Islamic system of banking, contrary to the conventional one, is based on Islam’s interest-free economic system, in which the money flows from higher towards the lower segments of the society.”

He further said that the worldwide trends show that a change is taking place in the policies of prominent banks. A number of banks, including the HSBC and Standard Chartered banks, have opened Islamic outlets at their certain branches.

The Reserve Bank of India (RBI) has formed a special committee in July on direction of the Government of India, for the study of ‘instruments of Islamic Banking and its possibilities in India’, headed by Mr. Anand Sinha, Chief General Manager.

“Islamic Banking offers financial products and services that conform with the Islamic principles, hence it can lead to the unlocking of large financial capital that the Muslims are now unable to invest in the interest-based system,” added Mr. Abdul Raqeeb, who is also former president of the JIH Tamil Nadu Zone. According to him, the Jamaat, which has been campaigning for Islamic Banking for long, is optimistic about the RBI move.

The JIH leader affirmed that introduction of Islamic banking in India would ensure higher foreign direct investment in infrastructure and other vital areas, strengthening long-term macro investment and boosting the country’s growth rate.

“Interest-based banking can create havoc, and can lead to the AP like cases of the farmers committing suicide while Islamic banking is more compassionate as it is based more on sharing of responsibilities. Also Islamic banks will provide micro finance for the poor and the daily basis workers for their small wants,” said Mr. Abdul Raqeeb.

The concept of Islamic banning is moving across the world. The assets controlled by the Muslims in India are estimated up to $1.5 trillion that is growing at a rate of 15% a year. In the year 2004, Islamic Bonds (Sukook) collected $30 billion. The Malaysian headquarters of Islamic Financial Services Board (IFSB), has emerged as a hub of Islamic banking. At least 265 Islamic banks are in function across 40 countries with assets worth $262 billion. Services provided by Islamic banks are popular among non-Muslims also as, more than 50% business of the HSBC’s Islamic banking division is with non-Muslims.

Mr. Abdul Raqeeb also held the nuclear deal with America contrary to the benefit of India and its people. “This treaty is totally one-sided and will prove to be a burden on our economy; in addition our security and sovereignty are also in peril,” he said. He condemned American President George W. Bush on his indication to Israel to attack Iran in case the talks failed. He was sure that if Iran is attacked by the US, oil prices will hike up to double and accordingly all essential commodities will become dearer.

Prior to this deal America barred India from the pipeline treaty with Iran that resulted in a hike in the price of petroleum and also we were compelled to vote against Iran. Now one can easily conclude what happens and how far can US compel us for their benefits if we accept to become a US satellite country. Jamaat-e-Islami Hind has opposed the deal and deemed it to be disastrous for the country. Jamaat has appealed to all political parties and public to unanimously oppose and struggle against the deal.

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