Srinagar: The High Court on Tuesday granted four weeks to the Reserve Bank of India, the Jammu & Kashmir Bank, the Union Ministry of Finance, the Chief Secretary to J&K Government, and the Principal Secretary Finance of the J&K Government, to file their response with respect to opening of a “Sharia Banking” window in commercial banks.
Hearing a public-interest litigation (PIL), a division bench of Acting Chief Justice Alok Aradhe and Justice MK Hanjura granted four weeks after the Union Ministry of Finance’s counsel submitted before the court that a reply in opposition to the PIL is under process and more time be granted for submitting the same.
The Union Ministry of Finance and the Reserve Bank of India were represented by their counsel Tahir Majid Shamsi. The J&K Bank was represented by their counsel Senior Advocate Zaffar Shah. No one appeared on behalf of the J&K Government today.
The PIL has been filed by an NGO, Peoples Forum, through its advocate Altaf Haqani. It has sought directions from the court that the Union Ministry of Finance be directed to issue necessary notification for introduction of Sharia Banking window as recommended by the Deepak Mohanty Committee and by the Report of the Inter- Departmental Group of RBI.
The Deepak Mohanty committee was constituted on July 15, 2015, by the RBI with the objective of working out a medium-term (five years) measurable action plan for financial inclusion. The committee had recommended that commercial banks in India may be enabled to open specialised interest-free windows with simple products like demand deposits, agency and participation securities on their liability side, and to offer products based on cost plus financing and deferred payment, deferred delivery contracts on the asset side.
Advocate Haqani argued before the court that Shariah Banking will most help poor people, who have to face humiliation from banks for recovery of loans. Shariah Banking provides loans without interest and these will be much easier for poor people to repay, he argued.
Haqani further argued that if developed countries could institute Islamic banking, why were J&K and India lagging behind? He quoted the Quran, the Bible and the Vedas to make the point that taking Riba (interest) is not approved by God.