Need to introduce interest – free banking in India
Banks came into existence with a commercial goal but also to save the peoples wealth, make a better use of the God – given resources and help the poor and needy. But considering the exploitative nature of the present banking system, a new interest – free system that is amenable to further social goals and more beneficial for human beings should be introduced soon.
The interest free – banking system is definitely more useful than others for mankind as evidenced by such banks being set up all over the world because Islam, in the interest of mankind at large, opposes all sorts of exploitation in every form and stands for fair and equitable dealings among men. Interest and usury – based dealing is a sort of exploitation . That is why almighty Allah strictly prohibited this practice as the Qur’an says ” oh you who believe ! Fear Allah and give up what remains of your demand for usury , if you are indeed believers ” (Al – Baqarah 278)
Despite the origins of interest – free banking in Islam , it remains an attractive proposition for those who wish to attract Muslim , and especially funds from the Gulf , and also because it is really a fair , just and equitable system which has enabled countries such as Indonesia and Malaysia to open interest free banks that work along with the conventional banking system.
Interest – free banking is not growing as it should , but it is progressing in some places at a snail’s pace. Globally it is still at a nascent stage , and is just three to four decades old as compared to the conventional system which has been practiced for over 100 years. The total assets of the Islamic banking industry is overestimated , but it is about the size of the New York city based bank : Citigroup.
Islamic finance was introduced for the first time as in the Islamic bank of Kuwait in 1977 and now there are 110 Islamic banks with countless branches in the world .
Islam is the second largest religion in India with 14.2% of the country’s population or roughly 172 million people identifying as adherents of Islam (2011 census) . And the lack of Islamic banking is a barrier to flow of substantial funds into the market.
In spite of these cogent reasons, interest – free banking is seen through the prism of Islam and although it serves in a better and more equitable way the needs of the country men, and so it has faced opposition mainly owing to prejudice and a narrow view of banking .
The present banking system has led to corruption and exploitation with some suicide deaths being reported in the press by people suffering under the high rates that had to pay to banks and money lenders.
The matter of great concern is that why interest – free banking is not possible in India where 172 million Muslims dwell , while Britain made it possible to set up 16 Islamic banks which has a population of 2.7 million Muslims , and besides this America , Switzerland , France and Germany have established 7, 6, 2 and 4 Islamic banks respectively .
And when it comes to the Indian constitution, there have been many amendments , and if there are any constitutional barriers they can also be removed in favour of equitable banking to promote the overall health of the banking system, which is the nerve centre of the economy , not only in India but in other foreign countries.
In fact, where there is a will there is a way and it depends on NDA governments intention , whether they want to set up an Islamic bank or not . But if India will introduce Islamic banking it will be beneficial for them as an Islamic banking window will encourage many from the Muslim community to come forward and invest in projects thereby mobilising huge amount of capital which they may not be willing to put in the banks. This also means that India will be able to attract huge investments from West Asia and from those who invest only in Shariat compliant projects . Muslims of India are eyeing the government to see how broad-minded it is regarding Muslim issues.
(The writer is a second year student at SSM college of engineering and technology , Kashmir)