Recently the whole globe faced financial depression mainly U.S and Europe, and we also saw that those countries based on interest-free economic system.
This is the scope for Islamic banking or interest free banking in India. Recently the Jeddah chapter of IFIB (Indian Forum for Interest free Banking) has submitted a memorandum to Salman Khurshid (External Affairs Minister of India).
They demands Interest-free banking in India because many Indians working in Saudi Arabia wishes to invest their money in India’s infrastructure and other Developmental activities, but they are staying because of the interest based financing in India. If the govt. decides to allow interest free banking it will never be a worse decision.
In the memorandum IFIB pointed out these:
· Interest-free Banking & Finance has functioning models in more than 70 countries around the globe. Many Western banks have opened Islamic banking windows and they cater to the needs of all faith communities.
· Their success has prompted even the Government of India to consider approval of Interest-free Finance as one among the solutions to present day problems faced by the Indian economy. (Ref: Raghuram Rajan Committee Report).
· 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.
K T A Muneer Executive member of IFIB said that Interest-free banking will be a vise decision for development of the country’s infrastrucrure and banking sector, and it will ensure effective participation of 20 crores of indians in country’s development process.
The reason for the financial crisis was because of excessive risk taking and offering what they really do not own, but in Islamic banking banks offer only what they own. and there no chance for another crisis.
I am still not sure what India is waiting for..
- Explainer: What Is Islamic Banking? (rferl.org)