A high profile committee of Planning Commission on Financial Sector Reforms (FSR), headed by International Monetary Fund (IMF) former chief economist, Raghuram Rajan has submitted its final report to the Prime Minister and chairman of Planning Commission.
The committee that was set up by the Planning Commission included Mr KV Kamath, CEO of ICICI Bank and presently president Confederation of Indian Industries (CII), Mr Vijay Mahajan, CEO, BASIX, Hyderabad, Mrs Naina Lal Kidwai, country head HSBC Ltd. and other top Economists, Bankers and leading personalities. It recommended various ways to take the country’s financial sector reforms forward. It had initially included a few points pertaining to Islamic banking, but at the final stage of submission of report to the PM, Islamic Banking has been changed to interest-free banking for faith-based sections. The financial version is yet to be put in public domain, which is eagerly awaited by a large section of the countrymen.
The Draft report of the commission was uploaded on the website and the public was asked to submit their comments before finalisation. Mr Zahid Ahmed, General Manager AICMEU and Dr Rahmatullah of CCI and trustee ICIF, pleaded the case of Islamic Banking in the final committee meeting at Mumbai. Mr H Abdur Raqeeb of ICIF met the chairman Mr Raghuram Rajan and other members in Hyderabad during the Indian Banking conference at Indian Business School (IBS) and submitted a memorandum to include Islamic Banking in the final report citing the recent advances in Islamic Banking in Japan, Singapore, and Britain and also the successful emergence of asset-based Islamic bonds – Sukuks as an answer to the recession due to sub-prime mortgage crisis in the West.
A very powerful representation from Qatar NGOs like Indian National Abroad (INA) by Nizar Kachory and Mr R Seetharaman, CEO DOHA bank pleaded for Shari’ah based ethical banking. It is also learnt that their intervention has impressed the Commission in terms of Islamic Banking. Mr A Haseeb, former executive director RBI, submitted the committee to consider the introduction of Islamic Financial system parallel with financial reforms of the existing system which he claimed answered the concerns of the committee of inclusion, growth, stability and social justice referring to the example of UK, a democratic secular country.
Citing Financial Services Authority (FSA) of Britain’s report on regulations and challenges, he advocated Islamic Banking in India too.
The marginalised sections of the Indian society and the minorities in particular are eagerly waiting for the government’s response on the recommendations of the committee and ushering of a positive change in the financial inclusion of the largely neglected segment for sustainable development in the years to come.