The Gulf Studies Programme of India Arab Cultural Centre, Jamia Millia Islamia organized a talk on “Islamic Finance & Banking: Progress in the Gulf and Prospects in India” on Tuesday, 1st October 2013 at the Centre’s Conference Hall.
H. Abdur Raqeeb, General Secretary of Indian Centre for Islamic Finance (ICIF) delivered the talk which was followed by comments, questions and answers.
Against the backdrop of prevalent economic disparities in India, Mr Raqeeb said that the country had created super rich and super poor. This huge gap, according to the speaker, needed to be bridged which required some alternative measures to be taken. Opening windows for Islamic banking and finance could be one such step that could help uplift some marginalized sections of society and also boost the country’s economy.
He referred to a recommendation made by a High Level Committee on CFSR (Committee on Financial Sector Reform) in 2008 which was then headed by the present RBI Governor Dr. Raghuram Rajan for an interest-free finance and banking.
Part of the recommendation read that “Another area that falls broadly in the ambit of financial infrastructure for inclusion is the provision of interest-free banking. Certain faiths prohibit the use of financial instruments that pay interest”.
This makes many interest-free banking products non-available which according to the recommendation denies India “access to substantial sources of savings from other countries in the region”. The Committee therefore recommended that “measures be taken to permit the delivery of interest-free finance”.
Over the uncertainty about success or failure of introduction of Islamic banking, Mr Raqeeb said that among Muslim countries Indonesia and Malaysia have been successful in this venture. Among the non-Muslim countries, UK, Singapore, Germany, Japan, France and Hong Kong were experiencing good amount of success. Today Luxemburg is a hub of Islamic banking and Islamic Banking and Finance is accepted in World Bank and IMF.
So far as China and India are concerned, he said that they have good prospects for it. There are about 6 million Indians working in the Gulf.
In India, in the State of Kerala Islamic banking was firmly opposed by Dr. Subramniam Swamy who filed a petition in the Cochin High Court which was admitted but the decision came in favour of Islamic banking and Al Barkah, earlier known as Cheraman Financial Services, stayed there. It was also granted NBFC license by the RBI.
On the issue of its applicability at mass scale, he said that Islamic banking was not Muslim specific. Its characteristics are transparency, ethical and accountability. And it is away from all those investments which are unethical like gambling and speculation. He said that Shariah-compliant finance has good prospects in India. He further said that the Islamic banking products were earning 15 to 20 percent profit in some non-Muslim countries which is much higher than what interest-based banks earn.
There is a growing interest in Islamic banking among non-Muslims, he said adding that in 2008 there was an essay writing competition on Islamic Banking and its potential in India. Four out of the five winners of the competition were non-Muslims.
About introducing Islamic finance and banking nothing much was required than just tweaking certain laws for Islamic banking, he said while quoting a former RBI governor.
The Sunday Indian magazine, published in a dozen languages carried an article by Prasoon S Majumdar which appealed to “embrace Islamic Banking.”
As trillions of dollars in the Middle-East are awaiting a nod for investment in India, Islamic Finance will change the face and fortune and also the growing infrastructural needs of the country, said Mr Raqeeb, who is also Convener of the National Committee on Islamic Banking. If it is useful, let us adopt it. If not, let us leave it. But why not give it a trial, questioned he.
Dr Javed Ahmad Khan and Dr Rafiullah Azmi of the Centre for West Asian Studies, Dr. M. H. Ilias, Aftab Ahmad and other faculty members of India-Arab Cultural Centre, office-bearers of ICIF Thalha Hussain and Ali Jasim, teachers and students of other departments were present.
The session was highly informative. Due to the bureaucratic paralysis, the legitimate right to introduce interest free banking system is not yet realized. In fact, the world is looking for this troubleshooting as a solution for the entire economic crisis.The request to Raguram Rajan is to widen your ambit of thought for the humanitarian sake.