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Islamic Banking in India- a Wrong precedence with dangerous consequences

More than financial impact, Islamic banking might be an adverse step towards secular ethos of the Hindu majority India

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Faisal Islamic Bank , Khartoum, Sudan. Wikimedia Commons

Amit Srivastava

As the year 2016 began,the decision to allow Islamic Banking was cleared up by the Reserve Bank of India. Reason: To honor the concept of financial inclusion.

In essence , the Committee on “Medium-Term Path for Financial Inclusion”, headed by Deepak Mohanty, has recommended “interest free windows” in existing conventional banks. It was done to pave ways for Islamic Banking in which the interest rates are banned. Now, India will get its first taste of sharia-compliant banking when the Saudi Arabia-based Islamic Development Bank launches operations in Gujarat. Let us go back a few years. In year 2007, the RBI working group had recommended that India must not permit Islamic banks to operate in the country. Now the RBI Governor Raghuram Rajan  has reversed the institution’s earlier stand on Islamic Banking. Needless to say, the central government headed by BJP Prime Minister Narendra Modi is equally keen on implementing the Islamic banking.

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Dynamics of Islamic Banking?

As per Sharia Laws, the interest on principle is ‘Haram’. Hence, Islamic banking doesn’t have concept of interest-rates. It may adversely affect the entire financial ecosystem of the nation. More than financial impact, Islamic banking might be an adverse step towards secular ethos of the Hindu majority India.

Before we analyze the socio-economic impacts of Islamic Banking, let us know about the various aspect of Islamic banking. Basically, Islamic banking has concepts of: Riba (interest), Haram (Non-Islamic), Halal (Islamic), Gharar (uncertainty), Maysir (gambling) and Zakat (Charity). Riba is the most important aspect of interest-free banking, and means prohibition of interest. Haram/Halal is a strict code for interest-free financial activities and its implications on Muslims and non-Muslims. Ghrarar/Maysir bans gambling in all forms. And Zakat is an instrument for Islamic charity.

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These aspects of Islamic banking strictly make it exclusive for Muslims. As per Sharia jurists, riba transactions with non-Muslims in Dar-ul-Harb (a Non-Islamic State) are not permissible. An Islamic bank also impose Gharar and Maysir on non-Muslims (Kafirs). As per Hadith 8.24, it is not permissible to give zakat (charity) to a Kafir (Non-Muslim).

Even though few non-muslim economists have praised Islamic Banking, it has serious repercussion on the conventional financial system. There is intentional financial fraud being practiced by Muslim gangs. They intentionally provoke Muslims to harm the existing haram banking system. No wonder why, there is a huge number of small and medium loan-defaulters among Indian Muslims. They take loans from Public Sector bank and never repay. If Islamic Banking would be allowed everywhere, this process might get more in practice. Such defaulters will borrow from public sector bank (non-Islamic banks) and deposit in Islamic banks. This will increase the funds in Zakat. And Zakat is used for Islamic terrorists’ organization and Wahabi radical organizations. As per some reports, even ISIS is being funded indirectly by Zakat contributions from India.

In this context, it is also important to note that Sharia laws are only safe guard for Muslims. They allow Muslims to exploit Kafirs (non-Muslims) in all form, even those which are Haram for Muslims. For example, Because Allah hates non-Muslims (Qur’an 40:35), Koran commends Muslims to mock the non-Muslims (Qur’an 40:35), betray (86:15), terrorize (Qur’an 8:12) and behead Kafirs (Qur’an 47:4), snatch their wives for sex-slaves and captives (Qur’an 4:3, 4:24, 33:50).  Such hatred of Quran against Kafir is being preached to Muslims every day. If the demand for Sharia laws is fulfilled, they would be encouraged to do the gruesome crimes against non-Muslims as their holiest book prescribes so.

There is a risk of Terrorism funding via Islamic Bank

The logic of financial inclusion and few benefits by Islamic banking are just farce against the potential damages to be done by it. More than destroying non-Islamic banks and funding the Islamic terrorist, Islamic banking poses serious threat on the ethics of policy formation and the common good of the society. Now, when polygamy and marrying off the minor girls are allowed by courts of law in India, the upcoming Islamic banking would led it to a place from where Sharia rule India would become a reality. The same Sharia rules have made wife-beating legal in many Muslim countries. If wife-beating, sex-slavery are allowed in India tomorrow, it won’t be a surprise because such things are very much legal under Sharia Laws. Islamic banking sets precedence toward such horrific Sharia law. In above context of Islamic approach towards, non-Muslims it is imperative to safe-guard the welfare of the citizens. Just for 15% Muslims, government must not ignore the safety of 85% non-muslim population of India. Self-proclaimed secular and liberals are silent on this heavily communal move, because it would hurt the vote-bank of their masters. And right-wingers won’t prefer to speak against it as their government is implementing it. However, as vigilant citizens, we must oppose such regressive moves and save India from becoming another Syria or Pakistan.

Amit is a freelancer based in India. Twitter: @amisri

  • Apeksha

    Stop posting rubbish content if you have no knowledge about particular things

  • Abrar

    Now, we have a guy who is more knowledgeable than Mr. Raghuram and Modiji. Why don’t you apply for RBI governor post ;). Stop this trash talks if you have no idea of financial system, Joker.

  • Mack K

    Get you basics right.
    I doubt your knowledge in finance.
    And please do no misquote.
    The reference you gave are not legitimate or are half statements which eventually change the message.
    So just don’t write for the sake of it.
    Just writing as article to create disharmony is not ethical, if you are a genuine writer.

  • Danny

    Disgusting article, this is simple common sense, if you are involves in profit and loss sharing then there will growth and loss for all, now in all the banks which deals in interest never goes down in loss but we have already heard that most people are bankrupt.

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  • Apeksha

    Stop posting rubbish content if you have no knowledge about particular things

  • Abrar

    Now, we have a guy who is more knowledgeable than Mr. Raghuram and Modiji. Why don’t you apply for RBI governor post ;). Stop this trash talks if you have no idea of financial system, Joker.

  • Mack K

    Get you basics right.
    I doubt your knowledge in finance.
    And please do no misquote.
    The reference you gave are not legitimate or are half statements which eventually change the message.
    So just don’t write for the sake of it.
    Just writing as article to create disharmony is not ethical, if you are a genuine writer.

  • Danny

    Disgusting article, this is simple common sense, if you are involves in profit and loss sharing then there will growth and loss for all, now in all the banks which deals in interest never goes down in loss but we have already heard that most people are bankrupt.

Next Story

Facebook to Hire Banking Expert to Run its Digital Coin Libra

Sensing a multi-billion dollar opportunity to improve the cross-border payments system

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Facebook, Banking, Libra
Facebook's vice president of messaging products and a key figure behind 'Libra' digital currency project. Pixabay

Facebook is looking to hire a seasoned executive to run its digital coin ‘Libra’ project who has the know-how of the complex government and central banking system.

According to David Marcus, Facebook’s vice president of messaging products and a key figure behind ‘Libra’ digital currency project, someone with experience in government and central banking would be a great choice to oversee the currency.

“We need someone who knows how economies tend to work, who understands how to operate in a very complex, decentralized governance type of environment,” Marcus told The Information on Friday.

Sensing a multi-billion dollar opportunity to improve the cross-border payments system, Facebook has announced to launch its own digital coin called ‘Libra’ next year.\

Facebook, Banking, Libra
Facebook is looking to hire a seasoned executive to run its digital coin ‘Libra’ project. Pixabay

“We need someone who has the gravitas to be able to carry the message on behalf of all the members — the 100 members and more of the association when this thing goes live — rather than have each and every one of us have piecemeal conversations left and right with all of the different governments and regulators that this whole network will be subject to,” Marcus elaborated.

The new digital wallet for ‘Libra’ currency would be available in Facebook Messenger, WhatsApp and as a stand-alone app in 2020.

Facebook has tied up with 27 organisations around the world to start the non-profit Libra Association to create the new currency.

Marcus denied reports that banks have rejected Facebook’s invitation to join the Libra Association.

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“We have had conversations with banks. We still have conversations with banks. And my expectation is that by the time this thing launches next year you will have banks that are going to be members of this,” Marcus was quoted as saying.

According to Facebook CEO Mark Zuckerberg, “In addition to our efforts, many other companies will build their own services using Libra — from payment companies like Mastercard, PayPal, PayU, Stripe and Visa, to popular services like Booking, eBay, Farfetch, Lyft, Spotify and Ubera.

“A number of leading venture firms are also joining to help drive innovation on the Libra network. We’re hoping to have over 100 co-founding members of the Libra Association by the time the network launches next year,” Zuckerberg said.

Facebook currently generates 99 per cent of its revenue from advertisements and digital currency would help it reach billions of users across products — aiming to create another stable revenue stream and make cryptocurrecny-based payments mainstream. (IANS)