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Islamic banking coming to India! But people need a crash course in how it works!!

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Islamic banking has been very common in the Gulf for decades now. With its interest free banking approach and a way for people to share the profits and losses, it has proved to be a benefit for masses there in a big way. The fact that it operates on the principles of sharia which over and above the points mentioned here prevents people from investing in businesses that are haraam for them like liquor and tobacco manufacturing makes it more Islamic as the name suggests.

According to a report in 2008 by BCG, Islamic banks had more than US $400 billion in assets and have been started with pretty good results in the West with many non–Muslims using its facilities.

Islamic-banking-in-india

And now that it’s finally coming to India after the Kerala HC has dismissed the petitions filed against it recently, people need to be educated regarding the concept. From what I have heard around and read at places, people seem to have many questions. Is Islamic banking similar to Islamic Jehad? Will it destroy the cultural fabric of our society? Will it affect the cosmopolitan culture of this country?

I guess we are not to blame to think this way. The media has sadly created such an image of the word Islamic that everything associated with it is looked upon in a negative vein . More than US $3.5 trillion are lying in the stocks of the Arab investors. Now that’s big money, isn’t it? Looks like all the sheikhs and the big shots seem to be flowing with money. But the problem is where to invest?

With the Western world increasingly isolating the Middle East after 9/11 and successive terrorist strikes, the Arabs aren’t interested to invest anywhere close to such places. Instead they are planning to look at China and India as these are the fastest growing countries on the planet.

With a vibrant democracy, good socio–economic principles and a good business climate, India offers a good option. But then according to the sharia law, the money in their hands can be invested in an interest free banking system only.

And this is where the need for modifying the banking regulations in India needs to be done. With the Kerala Industrial Development Corporation taking an 11% stake in Al Barakat Financial Services and plans to start an NBFC, a new era in banking could start for the Indian industry. Many NRIs in the Gulf are waiting for such a move to invest in India as can be seen from the offer of 10,000 cr from one Indian businessman alone based in Muscat.

The proponents of such a concept say that its participatory nature where the investors become shareholders getting a part of the profits or losses is a lovely one for this country. Probably India’s requirement of US $500 billion in infrastructure over the next five years could come from here. Who knows? But before that the Islamic banking industry needs common and internationally accepted standards on capital adequacy, risk and asset quality management

What do you think of this concept?

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  1. […] Islamic banking coming to India! But people need a crash course in how it works!! […]

  2. samaan says

    I like this concept . Most Well come to India

  3. Mahommad shejad says

    assalamualaykum,
    insaallah, islamic banking open in India very soon.
    in Maharashtra only,approximately 350 farmer suside in a year, just for the burden of interest.
    they take loan, but due to uncertain season,they don’t pay interest.
    Its help to all communities, aameen.

  4. anas israily says

    RBI is the biggest challenge as well as Indian constitution so first we need a change in constitution

  5. Proxy Harsh says

    what the is doing INDIAN govt…..fuck tht.

  6. navas says

    You are right , no bank can mobilize resource without FD. But in islmic banking , all financial transaction should have an underlying economic activity and risk and reward should be shared. So in the case of FD , customer buys a commodity from the bank by paying/depositing an amount (FD amount) to the bank with an agrement that the bank will buy back the commodity on future date. The price of the commodity on future date is decided by the customer and bank according to risk/reward sharing principle. In normal course it should be market price of the commodity as on maturity date of FD. So the return the customer gets depends on inflation. In some cases banks will pay return based on interbank rate prevailing in the respective country, but no fixed rate.

  7. Nadeem Ahmed says

    I am desperate to know about the working of Islamic banking, as I love to be a Islamic Banker.
    Dear friends, everybody talking about taking loan from Islamic bank but I want to know about F.D,
    how a Islamic bank give returns to a Fixed Depositor. As without F.D banking is not complete.
    I love to be a part of you and learn how it work.”Regarding Islamic Banking I am on serious note and want to work long term on it”.
    PLEASE DO ME REPLY.
    Regards.
    Nadeem Ahmed.

  8. FIROZ says

    Alahamdulilla……….

    Let all be in a interest free economy….

  9. Mohammad Aijaz says

    Islamic bank most awaited by indian Muslim Bankers.

  10. Mohammed Thariq says

    Islamic Banking and Finance. Most Welcome. Will be a real solution for indebtedness, poverty, penetration and empowering Indian economy.

  11. Faiyaz Ahamed Khan says

    Islamic Banking Provides Various Products According To Their Needs……….Its A Interest Free Banking System!

  12. Faisal Khan says

    waiting for this bank to come in india , I am online to open an account in indian islamic bank with no interest.

  13. Sunita Tiwwari says

    Islamic bank most awaited in India all community.

    1. Singh Raj says

      u feel

    2. Rabiul Islam says

      Thank you @Sunita Tiwwari – But many people believe that Islamic Bank only faciltate to the Muslim. Your thought is high, so you observed the reality.

    3. Omid Sohal says

      ??

    4. Omid Sohal says

      hi

    5. Sabgit Ali says

      @ samita will u b3 ma frnd?

    6. Med Aissa says

      hi i am med from algeria

    7. Vinod Kumar Bajaj says

      add me

    8. Johnson Mulakkal says

      haiiiiiiiiiiiiiiiiiiiiiiiiiiii sunita

    9. Empang Saat says

      sdoot sunita

  14. Syed Aklim Qadri says

    Good news at last…may these help to the most needy i.e the farmers who commits suicides of interest burden.

  15. Shathik Ali1948 says

    Information is highly appreciable.I would like to know the basic data for starting a mutual-benefit Non-baking system, based on Islamic Banking. Where could I get the idea – for practical implementation? Help me…

  16. PRADEEP SULEMANI says

    It is not at all practical in an open and market driven economy lik ours. It can flourish well in tightly controlled economy as the one that the sheikhs rule and maintain in the middle east. It will be a disastor and i dont think RBI will allow it. Also since the entire middle east is going through de-stabalization, it will be wise for india to stay away from such draconian banking systems which has not been revised for ages as it is based on the age old outdated and dirty islamic laws

    1. Nadeem Ahmed says

      I object Pradeep bhai not for your view on Islamic banking but on your quote ‘dirty Islamic law.’ Pradeep bhai Come towards Islam and try to study Islamic laws carefully. Islamic laws are the best till the day of judgement. I request you to study it carefully and think on it, as many Muslim laws are misunderstood by the people even our many muslims dont understand them properly. So a humble request to you that come towards Islam and let us know you about it. Hope after that your views will changed.
      TAKE CARE.
      Regards.
      Nadeem Ahmed

  17. Rabiul Islam says

    Islamic Banking a most awaited in India….Welcome Islamic Banking.

  18. Mohd Ramzan Khan says

    In past even in in India especially farmers commits suicides of interest burden. We all have to compare the prospect and problem of interest based bank and interestfree islamic bank, liberally.

  19. Asif Khan says

    Abolition of interest and introduction of new arrangements for financial intermediation based on profit sharing will ensure financial stability. Savings will flow from households to firms smoothly through financial intermediaries who will be able to plough back to the savers attractive returns gotten from the businessmen. Abolition of gambling and the resulting curbs on speculation will further contribute to the stability of the financial system. A stable financial system is, however, a necessary but not a sufficient condition for price stability.

    1. Muhammed Arfin Ali says

      Insallah very soon it will be in Nepal also

  20. Asif Hasan says

    It's not only awaited by muslim.but all countrypeople.

  21. Chowdari Prasad says

    With India focussing on Financial Inclusion, Micro Finance, Rural Development and recently the new Rural Development Minister proposing Banks for SHGs, it is time also to think of allowing Islamic Banking to prove that we are a secular country.

  22. Chowdari Prasad says

    With India focussing on Financial Inclusion, Micro Finance, Rural Development and recently the new Rural Development Minister proposing Banks for SHGs, it is time also to think of allowing Islamic Banking to prove that we are a secular country.

  23. Chowdari Prasad says

    With India focussing on Financial Inclusion, Micro Finance, Rural Development and recently the new Rural Development Minister proposing Banks for SHGs, it is time also to think of allowing Islamic Banking to prove that we are a secular country.

    1. Rabiul Islam says

      I respect your view. But one thing you must remember that INTEREST BURDEN harming all community, not onlly the Muslim…so it not a community matter.. its a humanity matter. Thank you very much.

  24. Hareem Tariq Khan says

    most awaited by many muslims in india!

  25. SHAHAB HUSSAIN says

    I really like this concept.
    I am just waiting for it to start in India.
    I hope that Indian Government will give it a green signal soon.
    I think it will have a positive effect for Indian Economy.
    India just go for it.

  26. Sajad lone says

    Asalamu/alikum:(May ALLAH bless you)
    Sir, it is most wellcome step to be taken by India, beacuse indian economy had been destroyed by western economic system mostly by IMF,World Bank etc.If Indian economy will be based on Islamic currency,banking,finance etc, the time will come that Indian economy may be most developed economy of the Planet. (Thanks)
    >>>>Sajad Ahmad Lone(B.A economics,Kashmir University)

  27. ASIF HASAN says

    This concept of intrest free banking is benificial for all the society.i want to aknow about this concept in detail.if any one will help me i will be very oblige.

  28. nadeem says

    since my chaildhood i know that about the intrest but no one can start this thing in india accept your team. till now i did not get any lone on intrest base from any bank. please tell me how to get lone from your bank. I would be very happy if you give me prompt replay.

  29. manoj kumar sekhar says

    This is high time for india to open its door for this concept. India needs money for its infrastructure and gulf is flushed with money. So islamic banking can be a good financial intermidiary between liquid gulf and deficient india.

    manoj

  30. Umair Abdul Razak says

    I really like this concept.
    I am just waiting for it to start in India.
    I hope that Indian Government will give it a green signal soon.
    I think it will have a positive effect for Indian Economy.
    India just go for it.

  31. nimit says

    is it recognised by RBI?

  32. Amit says

    Interest rate free banking.. Hmm… nice..
    Where do I sign up for the loans? I would like to have few crores for 30 years please.

    1. khalid says

      @Amit
      Islamic banking is interest free but at the same time you have to share in profit and loss. Its not that much easy that you take few crores and forget for 30 years.

  33. Hindustani says

    Nothing to think abt. this concept. But while reading this article in my gmail account, I saw an adwords ad – http://twitpic.com/3x0mam – Now tell me what do you think of this concept? :)

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