Millennium Post: Mumbai: Monday, July 31, 2017.
No steps have
been taken for the introduction of Sharia-compliant mutual funds in India, the
Reserve Bank of India (RBI) has said.
Replying to
an RTI application filed by a PTI correspondent, the central bank said the
Government of India had sought its comments on the launch of Sharia-compliant
mutual funds by State Bank of India in December 2014. The RBI submitted its
reply the same month, it said.
The Islamic
or Sharia-compliant financial system is based on the principles of not charging
an interest on deposits, as it is prohibited under Islam.
"The
Reserve Bank of India has not taken any step for introduction of
Sharia-compliant mutual funds in India," the reply said.
The RBI was
asked to provide details on the introduction of Sharia-compliant mutual funds
in the country. The SBI had in 2014 announced the launch of the same.
However, it
was deferred to make it a better and more attractive fund in the future,
according to an official communication.
H Abdur
Raqeeb, General Secretary, Indian Centre for Islamic Finance -- an NGO trying
to introduce members of the Muslim community to the Sharia-compliant banking
system, said the initiation of such special mutual funds for a select group of
people would be a much-desired and welcome step.
"It is a
misconception that Sharia-compliant mutual funds are beneficial to a particular
community. These funds will benefit the economy and ensure financial inclusion
of those who avoid such investment for religious reasons," he said.
Raqeeb has
been coordinating with various government and regulatory authorities for the
introduction of the Sharia- complaint banking system in India.
"When
the launch of Sharia mutual fund was announced by SBI, some of the gulf
countries were very enthusiastic for investment. It is high time the RBI and
the finance ministry instructed SBI to relaunch the same," he said.
SBI had
rejected an RTI application seeking details on the relaunch of Sharia-compliant
mutual funds, saying the "query is vague and not specific".
The RBI had
earlier proposed opening "Islamic window" in conventional banks for
the gradual introduction of the Sharia- compliant banking. On the instructions
of the RBI, an Inter-Departmental Group (IDG) has examined legal, technical and
regulatory issues for starting interest-free banking in India and has submitted
its report to the government.
The RBI had
in February last year sent a copy of the IDG report to the Finance Ministry.
A committee
on financial sector reforms, headed by former RBI governor Raghuram Rajan, had
in late 2008 stressed on the need for a closer look at the issue of
interest-free banking in the country.
RBI to
procure 50 note verifying machines
The RBI plans
to buy 50 Currency Verification and Processing Systems for its regional offices
for counting, sorting and authenticating banknotes of all denominations,
including the scrapped ones of Rs 500/1,000.
The machines,
for which the central bank has floated a global tender, is proposed to be
installed at its 18 regional offices throughout the country. As per the Request
for Proposal (RFP), the machines should be computer based and microprocessor
controlled and capable of processing, counting, sorting and authenticating
banknotes into 'fit for circulation', 'unfit for circulation', 'reject notes',
'suspect/forged notes', and 'emission-wise sorting on design and series', among
other categories.
While
specifying the system requirements and major technical specifications, the RFP
said each system should have a capacity to process at least 30 banknotes per
second. "The CVPS (Currency Verification and Processing System) should be
compatible with bank notes of various substrates, viz, cotton, cotton and
polymer mix, polymer and hybrid substrates," it said.
"The
CVPS shall be capable of processing all denominations and all series of Indian
banknotes (including Specified Banknotes in the denominations of Rs 500 and Rs
1,000)," the tender added. From time to time, the central bank phases out
old series notes from circulation and replaces them with those with additional
security features.
"The
legal tender status of certain series of banknotes (Specified Bank Notes) has
also been withdrawn and these banknotes have been subsequently demonetised.
"The CVPS shall have the capability to sort all the phased out/
demonetised genuine banknotes as unfit, irrespective of their physical
condition," the RFP said. RBI likely to cut rate on August 2 as inflation
hits record low With retail inflation receding to record low levels, the
Reserve Bank is likely to cut the benchmark lending rate by at least 0.25 per
cent in its third bi-monthly monetary policy review on Wednesday, say experts
and bankers.
Encouraged by
significant price improvement, bankers expect RBI, which has kept rates on hold
at 6.25 per cent for the fourth straight time citing risk to inflation, to
change its monetary stance and may even go for an aggressive rate cut.
"The
expectation is of rate cut of a minimum 25 basis points as inflation has eased
and also as industrial growth continues to remain weak. A rate cut will give a
push to credit growth which has been sluggish from last many quarters,"
Bank of Maharashtra Managing Director R P Marathe said.
Echoing
similar views, Indian Bank Managing Director Kishor Kharat said there is an
expectation that there could be 0.25 per cent rate cut by RBI this time. The
RBI may not touch Cash Reserve Ratio or Statutory Liquidity Ratio as there is
adequate liquidity in the market, Kharat added. The six-member monetary policy
committee (MPC) of the RBI headed by RBI Governor Urjit Patel will announce the
outcome of the meeting on August 2 afternoon.
According to
HDFC Bank Managing Director Aditya Puri, there is always a case, but there are
a number of members on the committee who will examine it. "Yes, inflation
has come down, but will it remain at this level? We all know that given the
base effect change, it will go up to some extent. Is there still a case for a
decline in interest rates? I think most people think so. What will happen, I do
not have a clue," Puri said.
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