Thursday February 22, 2018
Home Business Islamic Banki...

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

4
//
2682
Faisal Islamic Bank , Khartoum, Sudan. Wikimedia Commons
Republish
Reprint

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.

Follow NewsGram at Facebook: NewsGram

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.

Follow NewsGram at Twitter@newsgram1

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

Click here for reuse options!
Copyright 2016 NewsGram

  • 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.

  • 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

How telecom has become driver of economic change in India

0
//
17
The country's hyper-competitive telecom sector has led the revolution from the front.
The country's hyper-competitive telecom sector has led the revolution from the front. Wikimedia Commons
  • India has done well to stay ahead of the curve in the technological revolution
  • The sectoral change in productivity has been the highest in the telecommunications sector since the reforms of 1991
  • India has managed to provide the cheapest telephony services around the world

For the most part of human history, the change was glacial in pace. It was quite safe to assume that the world at the time of your death would look pretty much similar to the one at the time of your birth. That is no longer the case, and the pace of change seems to be growing exponentially. Futurist Ray Kurzweil put it succinctly when he wrote in 2001: “We won’t experience 100 years of progress in the 21st century – it will be more like 20,000 years of progress (at today’s rate).” Since the time of his writing, a lot has changed, especially with the advent of the internet.

India has done well to stay ahead of the curve in the technological revolution. The country’s hyper-competitive telecom sector has led the revolution from the front. In fact, according to Reserve Bank of India data, the sectoral change in productivity has been the highest in the telecommunications sector since the reforms of 1991, growing by over 10 percent. On the other hand, no other sector has had a productivity growth of above five percent during the same period. It is no wonder that it has also been one of the fastest-growing sectors of the Indian economy, growing at over seven percent in the last decade itself.

Also Read: Social Media in India: Understanding The Dynamics of ‘Facebook’ and ‘Twitter’

Such an unprecedented pace of growth has been brought about the precise levels of change that Kurzweil was so enthusiastic about. Today’s smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Meanwhile, India has managed to provide the cheapest telephony services around the world, which has hit rock bottom after the entry of Reliance Jio. This has ensured access to those even at the bottom of the pyramid.

A rise in internet penetration has distinct positive effects on economic growth of a country.
A rise in internet penetration has distinct positive effects on economic growth of a country. Wikimedia Commons

Even though consumers have come to be accustomed to fast-paced changes within the telecom sector, the entry of Jio altered the face of the industry like never before by changing the very basis of competition. Data became the focal point of competition for an industry that derived over 75 percent of its revenue from voice. It was quite obvious that there would be immediate economic effects due to it. Now that we’re nearing a year of Jio’s paid operations, during which time it has even become profitable, we saw it fit to quantify its socio-economic impact on the country. Three broad takeaways need to be highlighted.

Also Read: Quoting WhatsApp message renders ‘delete’ feature ineffective

First, the most evident effect has been the rise in affordability of calling and data services. Voice services have become practically costless while data prices have dropped from an average of Rs 152 per GB to lower than Rs 10 per GB. Such a drastic reduction in data prices has not only brought the internet within the reach of a larger proportion of the Indian population but has also allowed newer segments of society to use and experience it for the first time. Since the monthly saving of an average internet user came out to be Rs 142 per month (taking a conservative estimate that the consumer is still using 1 GB of data each month) and there are about 350 million mobile internet users in the country (Telecom Regulatory Authority of India data), the yearly financial savings for the entire country comes out to be Rs 60,000 crore.

To put things in perspective, this amount is more than four times the entire GDP of Bhutan. Therefore, mere savings by the consumer on data has been at astonishing proportions.

Today's smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Wikimedia Commons
Today’s smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Wikimedia Commons

Now, this data has been used for services that have brought to life a thriving app economy within the country. So, the second level of impact has been in the redressal of a variety of consumer needs — ranging from education, health and entertainment to banking. For instance, students in remote areas can now access online courseware and small businesses can access newer markets. Information asymmetry has been considerably reduced.

Third, a rise in internet penetration has distinct positive effects on economic growth of a country. These effects arise not merely from the creation of an internet economy, but also due to the synergy effects it generates. Information becomes more accessible and communication a lot easier. Businesses find it easier to operate and access consumers. Labour working in cities has to make less frequent trips home and becomes more productive as a result. Education and health services become available in inaccessible locations. Multiple avenues open up for knowledge and skill enhancement.

Also Read: Facebook to ‘Signal’ news gathering for journos

An econometric analysis for the Indian economy showed that the 15 percent increase in internet penetration due to Jio and the spill-over effects it creates will raise the per capita levels of the country’s GDP by 5.85 percent, provided all else remains constant.

Thus, India’s telecom sector will continue to drive the economy forward, at least in the short run, and hopefully catapult India into 20,000 years of progress within this century, as Kurzweil postulated. The best approach for the state would be to ensure the environment of unfettered competition within the industry. Maybe other sectors of the economy ought to take a leaf out of the telecom growth story. The Indian banking sector comes to mind. However, that is a topic for another day. (IANS)

(Amit Kapoor is Chair, Institute for Competitiveness, India. He can be contacted at Amit. Kapoor@competitiveness.in and tweets @kautiliya. Chirag Yadav, a senior researcher at the institute, has contributed to the article.)