IslaMIC BaNKING MaY Not taKe oFF

Government is not in favour as step needs legal changes.

Putting all speculation to rest, the Centre has indicated that it has no intention to introduce interest-free Islamic banking in the county, as it has “no relevance”, despite the Reserve Bank of India’s (RBI) clearance.

Minister of State for Finance Santosh Kumar Gangwar, while replying to a question in the Lok Sabha last week, indicated that the government was not in favour of Islamic banking as it would require various legal changes. “The RBI had set up an inter-departmental group on Islamic banking. The entire exercise was aimed at promoting financial inclusion, accessing the huge market potential to attract finance from Gulf countries for infrastructure development. However, on consideration of the interdepartmental group’s report, it is observed that even to introduce limited products, various legal changes would be required,” said Gangwar in his reply.

He further said: “Moreover, the objectives of financial inclusion for which Islamic banking was explored by the RBI has no relevance, as the government has already introduced other means of financial inclusion for all citizens like the Pradhan Mantri Jan Dhan Yojna, Pradhan Mantri Suraksha Bima Yojna, Pradhan Mantri Jeevan Jyoti Bima Yojna, Pradhan Mantri Mudra Yojna, etc.”

Sources said the RBI’s move was scuttled as the government was under pressure from different quarters within the party and some alliance partners. BJP Rajya Sabha MP Subramanian Swamy has been opposing the move vehemently for a long time. A Shiv Sena MP, Chandrakant Baburao Khaire had submitted a plea during Zero Hour in the Lok Sabha earlier last week, urging the refusal of an “Islamic window” in the banking system.

The government’s response has come as a dis- appointment to many who were working to create a conducive atmosphere for the introduction of Islamic banking. Syed Zahid Ahmad, founder of “Economic Initiatives”, has written to Gangwar that the Jan Dhan Yojna and Bima Yojna just cannot ensure financial inclusion of Muslims. “I request you to kindly review your observation about interest-free windows after listening to our concerns in the national interest and through good governance. Kindly allow us to feel that ‘ sabka saath sabka vikas’ is really meant to ensure socio-economic justice for all Indians irrespective of the region or religion we belong to,” he said in his letter.