Has it ever been a secret that Islam looks down upon usury and interest and bans it? What is common knowledge is prohibition of payment or acceptance of interest on specific term loans. The Islamic banks never knowingly deal with companies dealing with gambling, alcoholic beverages or porcine food products. The said banks have boards of Islamic religious scholars whose word is the last word on such subjects.
From Jakarta to Jeddah, there are 265 Islamic banks. They are functioning in 40 countries across the globe. Their total assets happen to be to the tune of $ 262 million, to quote Mr. Abdur Raqeeb, General Secretary Indian Centre for Islamic Finance (ICIF).
“If the UK, Hong Kong, Singapore and France can incorporate Islamic banking, India too can look at it,” said Mr. Raqeeb. They have already given a request to the Reserve Bank of India and the Finance Ministry to introduce an interest-free window in the conventional banks with the existing Indian Banking Regulation Act.
It is interesting to note that “in 2008, Malaysia’s Securities Commission, which aims to make the country a hub for global Islamic banking, approved Reliance Asset Management as an Islamic fund manager. Indian banks like ICICI and Kotak have Shari’ah-compliant windows in their Gulf operations. Asset Management companies offer such services as well. But these are at a nascent stage and are likely to grow with Gulf funds and NRIs as potential investors.”
– Nandita Sengupta, Times of India, Feb 5.
The Aligarh Muslim University was the first to anticipate the things to come. The eminent authority on Islamic Banking, Dr. M. Nejatullah Siddiqi designed the syllabus. His view is that demand will grow with the passage of time and the corporate houses would soon realise the efficacy of Islamic Banking.
It has to be remembered that Islamic Banking is not Muslim-specific. In Malaysia, to quote Mr. Raqeeb, 40 per cent customers are non-Muslims.
Economist Ausaf Ahmad was to-the-point in an interview: No one is looking at Islamic Banking for the love of Islam or for the love of Muslims. They do it for the love of money. Transparency, accountability and regulation are important in Islamic Banking.
The view of the stock analysts is: Out of 6,000 BSE-listed cos, roughly 4,200 are Shari’ah-compliant. The BSE has a Shari’ah-compliant index. The BSE TASIS Shari’ah 50 index includes companies like Reliance Ind, Bharti, Airtel, and Teta Tele. Reliance Capital Asset Management, say sources, has two Islamic funds, managed from Malaysia.
The point is: If the powers-that-be knew the advantages of interest-free banking, why did they not do what are they are doing now?
However, it is a matter of satisfaction that the Kerala State has decided to take initiative in this regard and the first Islamic Bank is going to start business by 2012.