IslamicFinance.de

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 will get its first taste of sharia-compliant banking when the Islamic Development Bank launches operations in the state of Gujarat. No date has yet been announced, but already complaints have emerged within the ruling Hindu nationalist Bharatiya Janata Party. Prominent BJP politician Subramanian Swamy says Islamic banking goes against India’s principles of secularism. India's prime minister Narendra Modi visited Saudi Arabia in April and signed an extensive agreement with the bank. Under the agreement, the IDB will establish its first Indian branch in the Gujarat city of Ahmedabad and go on to open more branches in India in the future.

The Kerala High Court on Thursday dismissed a writ petition filed by Janata Party president Subramanian Swamy and others against the government participation in a company based on Islamic principles. Kerala government was hoping to float an NBFC in the name of Al Barakah Financial Services Company through the state-owned Kerala State Industrial Development Corporation (KSIDC) in association with some Kerala based entrepreneurs who are averse to an interest-based system.
So, the efforts of the Kerala government to start a Sharia compliant Islamic investment company seem to become soon reality.