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INDIA:
The country’s central bank, Reserve Bank of India (RBI), has begun a
review of regulations on Islamic banking in India. According to local
reports, the central bank has established an internal committee
consisting of senior RBI officials: Rajesh Verma, the deputy general
manager of the department of banking operations; Archana Mangalagiri,
the general manager of non-banking supervision; and Bindu Vasu, a joint
legal adviser.
The
call for a re-evaluation of Islamic banking regulations was initiated
following RBI’s introduction of differentiated banks in India,
particularly payments banks and smaller banks, as a start. Supporters
of Islamic banking are building a case for Shariah compliant banking in
the face of the reforms in India’s banking sector. “One shouldn’t link
Islamic finance to religion but approach it as an alternative model of
banking, which is prevalent worldwide,” said H Abdur Raqeeb, the
general-secretary of the Indian Centre for Islamic Finance.
Apart
from Muslims, there are still a large number of consumers in India who
prefer Shariah compliant financing over conventional. This particular
segment of the population is more comfortable putting their money in
real estate or any avenue that is not in the financial system, as
compared to parking it in a bank account as it would generate interest.
The implementation of Islamic finance in India has been mooted for a
long time.
The
attempts by Islamic institutions and private groups have not been
successful due to regulatory constraints and opposition from local
politicians. However, since the since the appointment of Raghuram Govinda
Rajan as the governor of RBI, hopes for Islamic banking in the country
has been reignited and it is believed that his appointment as governor
would help expedite the introduction of Islamic finance in India (see
IFN Vol. 11 Issue 8).
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