India’s Prime Minister Manmohan Singh said he will ask the central bank to learn more about Islamic finance from Malaysia, which has the world’s biggest market for Shariah-compliant debt, or sukuk.
There is no regulated Islamic finance market in India, where Muslims make up about 13 percent of the 138 million population, according to the government’s 2001 census. A panel headed by Raghuram Rajan, a finance professor at the University of Chicago and former chief economist at the International Monetary Fund, recommended in 2008 that India introduce Islamic banking to attract more capital.
“There have been, from time to time, demands that we should experiment with Islamic banking and I will recommend to the Reserve Bank of India to look at what’s happening in Malaysia,” Singh said in Kuala Lumpur today.
In Malaysia, 60 percent of the 28 million people are Muslim and Islamic banking assets amount to 337.6 billion ringgit ($109 billion), or 20 percent of the total, the Finance Ministry said in its 2010-2011 economic report Oct. 15.
Sukuk pay asset returns to comply with the religion’s ban on interest.