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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
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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

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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.

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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

RBI To Transfer 50,000cr Surplus To The Central Government

The Reserve Bank's income comprises of earnings from foreign and domestic sources, with the major portion being contributed by interest receipts, complemented by relatively small amounts of income from discount, exchange, commission, etc.

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Reserve Bank of India. VOA

The Reserve Bank of India (RBI) on Wednesday said that it will transfer Rs 50,000 crore as surplus to the central government for the year ended June 30, 2018.

The Central Bank which follows the July-June year had transferred Rs 30,659 crore to the government’s coffers for the year ended June 30, 2017.

According to RBI, the decision to transfer the surplus was taken by its Central Board which met here on Wednesday.

The Central Bank which follows the July-June year had transferred Rs 30,659 crore to the government's coffers for the year ended June 30, 2017.
The Central Bank which follows the July-June year had transferred Rs 30,659 crore to the government’s coffers for the year ended June 30, 2017.

The Reserve Bank’s income comprises of earnings from foreign and domestic sources, with the major portion being contributed by interest receipts, complemented by relatively small amounts of income from discount, exchange, commission, etc.

Also Read: RBI Penalty not to have any material impact: IDBI Bank

The RBI Act stipulates that after making provisions for contingencies and corpus funds as defined therein, the balance profit of the apex bank is to be transferred to the central government. (IANS)