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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

Mobile Banking Becomes Main Personal Banking Channel in Singapore

Mobile banking is growing for a reason - it comes with numerous benefits. Customers get to enjoy easier transactions, increased flexibility in keeping track of finances among others.

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Virtual banking is becoming the go-to option for many customers in Singapore. Flickr

Digitization is revolutionizing the personal banking sector, with mobile banking experiencing a 15% jump over the last 12 months, as noted by Telecomasia. In fact, mobile banking now beats branch banking by transaction volume and new customer adoption in Singapore. Mobile is entering a revolutionary and rapid phase with regions like South East Asia and Africa becoming the main driver of this trend globally. Banks, in particular, are putting a lot of effort to leverage mobile technology to remain competitive.

Despite the rising popularity of mobile banking, banks need to fully transform before Singapore can be considered a mobile-driven digital economy:

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Bank of India. Flickr

Dedication to Improving User Experience 

Up to 46% of mobile banking users have reported issues when using their mobile banking app which the finance customer service industry are invested in improving. From logging problems to long loading times and even security issues, the personal banking sector understands the value in improving user experience. Loyal customers who save money each month via mobile apps are motivated by banks who embrace the enhancement of digital services, and who place their valuable customers at the center of their transformation. This not only improves their reputation, but also deepens overall customer relationships.

Building Trust and Brand Confidence is Top Priority

Personal banking is all about offering quality services to consumers in a convenient and effective way, and mobile banking falls perfectly in this category. But to achieve meaningful gains, building trust and brand confidence has to be a top priority for banks, as 41% of bank customers who are yet to switch to mobile banking apps cite trust and security as their main concern. Additionally, customers are faced with numerous choices in the market, combined with Fintech disruptions in the industry. To build trust, banks need to focus on developing mobile banking platforms that assure customers of secure, fast and efficient banking at all levels.

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Despite the rising popularity of it, banks need to fully transform before Singapore can be considered a mobile-driven digital economy. Flickr

Virtual Banking is the Way to Go

Virtual banking is becoming the go-to option for many customers in Singapore. With mobile wallet use on the rise, more bank customers are expected to opt for multiple mobile banking apps to suit their specific financial needs. From Apple Pay that makes shopping online convenient to NetsPay that allows you to make digital payments via top banks in Singapore, virtual banking is expected to be the next frontier of growth in the personal banking sector. This is evident as we continue to see the emergence of more mobile banking solutions and e-wallets, with financial institutions adopting innovative digital banking technologies that make life easier to end customers.

Mobile banking is growing for a reason – it comes with numerous benefits. Customers get to enjoy easier transactions, increased flexibility in keeping track of finances, convenient monitoring of all transactions, more efficient bill payments, saved time and money spent on visiting bank branches, among others. Despite the industry facing a few challenges, mobile banking is expected to remain the leading personal banking channel in Singapore.