Deccan Herald: New Delhi: Sunday,
April 09, 2017.
No deadline
has been set for introduction of Sharia or interest-free banking in India, the
Reserve Bank of India (RBI) has said. Islamic or Sharia banking is a finance
system based on the principles of not charging interest, which is prohibited
under Islam.
The RBI had
earlier proposed opening of "Islamic window" in conventional banks
for gradual introduction of Sharia- compliant banking. Responding to an RTI
application, the RBI said it has not taken any step to introduce Islamic window
in banks for gradual introduction of Sharia-compliant interest-free banking in
India.
"RBI has
not set any deadline for introduction of interest-free banking," the
central bank said in response to the RTI query filed by PTI. However, on the
instruction of the central government, an Inter-Departmental Group (IDG) set up
in RBI has examined the legal, technical and regulatory issues for introducing
interest-free banking in India and has submitted its report to the government,
it said.
The RBI had
in February last year sent a copy of the IDG to the Finance Ministry. "In
our considered opinion, given the complexities of Islamic finance and various
regulatory and supervisory challenges involved in the matter and also due to
the fact that Indian banks have no experience in this field, Islamic banking
may be introduced in India in a gradual manner," the central bank had told
the Ministry in a letter.
In late 2008,
a committee 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 the country.
"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
committee had said.