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Friday, 24 August 2007

Meeting to discuss possibility of establishing Islamic banks in India

New Delhi: If all goes as planned, India may soon have Islamic banks. According to Rajya Sabha Deputy Chairman K. Rahman Khan, nearly 50 per cent of India's 150 million Muslims are currently out of the banking system due to religious factors since earning interest on deposits are considered un-Islamic. "If we provide this opportunity, it will increase national savings greatly. The cash that devote Muslims keep at home will get invested meaningfully," Khan said.
Khan has lent his support to a two-day international conference getting underway in New Delhi form August 31 to discuss the possibility of establishing Islamic banks in the country. Talking about the conference, Khan said that it is going to be an effort to educate the masses and bring to the notice of the government that Islamic banks are a viable alternative system to the commercial banks. "I am sure the government would not be opposed to it since we stand a good chance of getting a good share of the $400 billion that Islamic banks manage globally to give a boost to the Indian economy. I am told the [federal] government has an open mind on the issue while the Reserve Bank of India is already looking into it," Khan said. Incidentally, for the first time ever, both chairman and the deputy chairman of Rajya Sabha are Muslims. While Khan has been holding the office of the deputy chairman since 2004, election of Mohammad Hamid Ansari as the new vice-president has created this unique record since the vice-president is also the ex-officio chairman of the Rajya Sabha. Talking about the viability of opening Islamic banks in India, Khan said that since India is home to such a large Muslim population, its introduction has already been delayed. "I guess it is because Islamic banks were thus far seen as a religious concept and not as an economic concept. He pointed out that the concept is already in vogue in a limited way as the Unit Trust of India runs a fund worth $250 million, especially for Muslim non-resident Indians in the Gulf. "Once Islamic banks are allowed, it will require only minor changes in the system and even non-Muslims would be able to park their funds and earn profits as participants or partners," Khan added. - (GN, 23 Aug 07)

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