Srinagar: Senior resistance leader Mirwaiz Umar Farooq, on Friday slammed the government of India (GoI) for refusing to pursue Islamic banking in India.
In a tweet Mirwaiz said that the GoI was not able to see the “benefits” of Islamic banking.
“Govt blinded to the benefits that Islamic banking can bring to its people & overall economy. As per IMF, Islamic finance assets grew at a double-digit growth rate from $200 US billion in 2003 to $1.8 trillion at the end of 2013 that include non-Muslim countries China, Germany, UK &US,” Mirwaiz wrote on the micro-blogging site where he has over 79000 followers.
Islamic or Sharia banking is a finance system based on the principle of not charging interest, which is prohibited under Islam.
On November 12 Reserve Bank of India (RBI) said that it has decided not to pursue a proposal for introduction of Islamic banking in India.
“Taking into account, the wider and equal opportunities available to all citizens to access banking and financial services, it has been decided not to pursue the proposal further,” the RBI said in its reply to an RTI application filed by a news agency.
The Mirwaiz, who heads his faction of Hurriyat Conference, alleged that GoI resorted to its “political agenda” on the issue of Islamic Banking.
“Express regret at Govt of India’s rejection to introduce #IslamiBanking (Islamic Banking) due to its politically motivated religious agenda,” he further wrote on the Twitter.
The issue of introduction of Islamic banking in India was examined by the RBI and the government of India and subsequently the demand for its establishment was rejected.
The Mirwaiz, who did not attend the Friday prayers today at Jamia Masjid, said that establishment of Islamic Bank was a long pending demand of Kashmiris.
“#Kashmir has been demanding Islamic banking for a long time to accrue of the benefits of banking as per Islamic law & in turn help the economic growth of J&K,” he added.
A group of academicians, civil society members and businessmen had launched an advocacy group on Islamic banking in Kashmir in January 2016.
“We have done a valley-wide survey to know if people want alternative financial system in J&K,” said chief of Islamic Banking Kashmir (IBK), Mehboob Makhdoomi. “We got members from all districts and are currently analyzing the results (of the survey). It has been a year of data collection.”
Makhdoomi also wrote a book to aware people about the benefits of Islamic banking.
“Since the state of Jammu & Kashmir has a distinction of being the only Muslim-majority state, it, therefore is a natural testing laboratory for Interest-Free finance & banking, and that the first Interest-free window should be set up in one of the banks of J&K, which can then serve as a prototype for other states,” Makdoomi wrote a letter to RBI in January in 2016.
He was responding to the appeal made by the Reserve Bank of India on Dec 28th 2015 to the concerned entities for suggestions, when it released its report of the ‘Committee on Medium-term path for Financial Inclusion’.
In 2008, a committee by GoI on Financial Sector Reforms, headed by former RBI governor Raghuram Rajan, had stressed on the need for a closer look at the issue of interest-free banking in India.
“This is not to say that ‘Interest-Free banking’ is limited to Muslims alone, as we have seen in Malaysia that 40% lenders and 60% borrowers are Non-Muslims, who consider it be ethical, if not religious, thus growing their society on mutual dependence & diminishing disparity,” Makdoomi wrote.
“However, in India where it’s a new concept, Muslims shall certainly be its first users due to the reasons of their faith, which prohibits them to deal with Interest, as already pointed out by Dr Raghu Ram Rajan (Governor RBI) in his CFSR (Committee for Financial Sector Reforms Report) in the year 2008.”
The letter further reads that (IBK) is doing a “verifiable Survey in J&K”, “with an aim to find out the percentage of people, who would use Interest-Free financial products/services”.
“Should it become a reality,” the letter read, “and that they shall come up with a comprehensive report on the ‘Potential of Interest-Free banking in J&K’.”
“Certain faiths prohibit the use of financial instruments that pay interest. The non-availability of interest-free banking products results in some Indians, including those in the economically disadvantaged strata of society, not being able to access banking products and services due to reasons of faith,” the GoI appointed committee observed.
Later, on the instruction of the central government, an inter-departmental group (IDG) set up in the RBI examined the legal, technical and regulatory issues for introducing interest free banking in India and has submitted its report to the government.