Reserve Bank of India (RBI) Governor D Subbarao today ruled out introduction of Islamic banking in the country but said other methods for channelising funds based on the principles of Islamic law can be looked at.
"Islamic banking is not possible", he said, adding the central bank could look at other vehicles based on Islamic banking principles to channelise NRI funds.
The Government of India has once again put in cold storage the demand of a section of the Muslim community for introducing interest-free banking system in the country. The government has told the Rajya Sabha, with reference from Reserve Bank of India, that Islamic banking is not legally feasible for banks in India or Indian banks abroad.
Islamic finance could provide some of the multi-billion-dollar loans needed by Asia to pay for $US8 trillion in infrastructure costs over the next decade, says ratings agency Standard and Poor's (S&P).
Islamic financing is a growing source of loans worldwide and is now a better way to fund huge Asian infrastructure deals than banks, S&P says in a new report.
Islamic Banking is the right platform to boost 'green financing' as it is based on the concept of promoting good practices and values, a leading Indian banker in Qatar has said.
R Seetharaman, the Chief Executive Officer of Doha Bank , said Islamic banking is not just a financial system, but is part of a total value-based social system that seeks to enhance the general welfare of society as a whole.
The European Union’s largest and strongest economy, Germany, is finally edging toward facilitating Islamic finance in its jurisdiction. Germany has a Muslim population of 4.3 million, the second largest Muslim population in the EU after France with 5.5 million. Reports from Germany stress that the country’s banking regulator, the Federal Financial Services Authority (BaFin), has issued a limited banking license to Kuveyt Turk Participation Bank, one of Turkey’s four so-called participation (Islamic) banks. Kuveyt Turk is majority-owned (62 percent) by Kuwait Finance House, one of the largest Islamic banks in the world in terms of capital and assets. The Islamic Development Bank (IDB) also has a 9 percent stake in Kuveyt Turk Participation Bank.
What is the "elevator" pitch of Islamic finance to the non-Muslim and the sceptical Muslim? Why do news releases often become articles in Islamic finance?
The finance ministry is considering a new category of non-banking finance companies (NBFCs) that will offer Islamic banking products in India.
The decision follows RBI’s reluctance to allow commercial banks to offer these products for viability reasons.