Khurshid backs interest-free banking system in India
Indian Foreign Minister Salman Khurshid during his recent visit to the Kingdom emphasized the need to introduce an interest-free banking system in the country, stating, “We need such a system in India and debates are underway to introduce it.”
Khurshid made this comments while receiving a memorandum from representatives of the Jeddah Chapter of the Indian Forum for Interest-Free Banking (IFIB).
K.T.A. Muneer, an executive member of IFIB, who presented the memorandum along with another member Usman Irumpuzhi, said Khurshid had responded positively to the issue.
“In a democracy like India we have to take into consideration the opinion of others before introducing the system,” Muneer quoted the minister as saying.
The IFIB memorandum aimed at drawing the minister’s attention toward actualizing the hopes of more than 3 million Indian expatriates working in Saudi Arabia and other Gulf countries in the establishment of interest-free financial institutions of their choice.
It referred to a statement made by Prime Minister Manmohan Singh during his visit to Doha a couple of years back that India requires $ 500 billion for infrastructure develop- ment in the next five years and that New Delhi was seeking Gulf investment for the purpose.
Interest-free banking and finance has functioning models in more than 70 countries around the globe, said Muneer. Many Western banks have opened Islamic banking windows and they cater to the needs of all faith communities.
The fundamental objective of the interest-free banking system is to eliminate exploitation of borrowers. It considers lending as an investment and distributes investment risk between the users and suppliers of funds.
Muneer said the introduction of interest-free banking would strengthen the Indian economy and make it a major financial center.
“It will ensure the active participation of a large number of Indian citizens living in the country and abroad in banking and financial activities,” he added.
The system will also help eliminate poverty in the country, boost small and medium enterprises, and create more job opportunities.
“The interest-free banking and financing systems have built-in protection mechanisms that promises what it owns instead of engaging in speculation and excessive risk-taking, which were the primary reasons for the global financial crises,” Muneer said.
“Indian expatriates in Saudi Arabia represent a huge potential force and if they are given a proper channel to invest their money, they will be able to pool a huge volume of funds that could be streamlined into productive areas, which will positively change conditions of millions of poor and downtrodden in India. It will also boost our nation’s GDP growth,” said P.M. Amir Ali, another IFIB executive member.