The Reserve Bank of India (RBI) has said it cannot disclose the Finance Ministry's response about the introduction of Sharia banking in India. The RBI had earlier proposed opening of Islamic window in conventional banks for gradual introduction of Sharia- compliant or interest-free banking in the country. RBI was asked to give the copy of the letter sent to it by the ministry on the recommendation of its Inter Departmental Group (IDG) regarding Islamic banking.
The central bank had sought response from the Department of Financial Services (DFS) under the finance minister whether their letter can be disclosed under the Right to Information (RTI) Act. As advised by the DFS, the disclosure of information would cause a breach of privilege of Parliament or the state legislature.
Before handing over his charge to present Reserve Bank of India (RBI) Governor Urjit Patel, former Governor Raghuram Rajan had proposed working with the Government to introduce Islamic Banking. Most recently, Union Finance Ministry said that Islamic banking was not relevant any more as the Government has already introduced several programmes for all citizens towards financial inclusion. Finance Minister Santosh Kumar Gangwar said various legal changes are needed if even limited products were to be introduced under Islamic banking. It is estimated that 180 million Muslims in India are unable to access Islamic banking because of non-availability of interest free banking. RBI in its report had said it would explore to introduce interest-free banking products in consultation with the government, but before the consultation could be held, the Government of India derailed this whole process.
The Reserve Bank of #India (RBI) has proposed opening of "Islamic window" in conventional banks for "gradual" introduction of Sharia-compliant or interest-free banking in the country. Both the Centre and RBI are exploring the possibility of introduction of Islamic banking for long to ensure financial inclusion. The central bank's proposal is based on examination of legal, technical and regulatory issues regarding feasibility of introducing Islamic banking in India on the basis of recommendation of the Inter Departmental Group (IDG). RBI has also prepared a technical analysis report which has been sent to the Finance Ministry.
In #India Jammu and Kashmir Bank said it was ready to offer Islamic banking, if the Reserve Bank of India approved the move. The bank's newly-appointed chairman Parvez Ahmad said there was a strong demand for such banking service in Kashmir but RBI would need to examine the proposal. RBI has recently suggested to explore the modalities of introducing interest-free banking products in the country in consultation with the government.
The Reserve Bank of India (RBI) has said it will work with the government to introduce interest-free banking, as part of its efforts to improve financial inclusion. The RBI’s proposal paves the way for introduction of Islamic finance in India. In March 2015, State Bank of India (SBI) deferred the launch of a Shariah-compliant equity mutual fund at the last moment. SBI maintained that the decision was a commercial call, but there was speculation that the decision had to do with political pressure. Senior BJP leader Subramanian Swamy is among the most vocal critics of Islamic finance, arguing that it could encourage religious conversion and also open channels for terrorist organisations to channel money into India.
India's central bank has proposed working with the government to introduce interest-free banking. The Reserve Bank of India (RBI) made the proposal last week, as departing central bank governor Raghuram Rajan hands over the reins to Urjit Patel. Development of Islamic finance has been slow in India because of strong opposition from bureaucrats and politicians from the ruling Hindu-nationalist Bharatiya Janata Party. An estimated 180 million Muslims have been unable to access Islamic banking because of laws that require banking to be based on interest. The RBI said it would explore introducing interest-free banking products in consultation with the government, a key detail as this opens the prospects of supportive legislation.
The only tool (of interest rate) for RBI to control liquidity for balancing inflation and growth rate is not enough resulting in the inability to allow India grow better without inflation. Trying to exert control on inflation, RBI fails in terms of interest rate and the country's economic growth tumbles. According to RBI Governor, growth rate will decline and there will be an increase in inflation. He further indicates that in 2013 inflation is expected to rise in the third quarter followed by an ease in the fourth quarter.
India may soon get its first foreign Islamic bank with the Reserve Bank of India (RBI) seeking government approval to allow Turkey's Bank Asya to offer Shariah-compliant lending in the country. Bank Asya is keen to start its Indian operations through a representative office in Mumbai.
RBI has requested the government to consider the Turkish bank's application within 45 days.