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Home / Business / Islamic banking ideal for economic growth: Expert

Islamic banking ideal for economic growth: Expert

Bhopal: The interest-free Islamic banking system will provide the ideal thrust to India’s economic development, an expert said here Sunday.

Islamic banking, which propagates zero-interest lending, can solve not only farmers’ crisis but will also fill the gap between the financially-excluded and financially-included classes in India, Irfan Shahid, an economist and expert on Islamic banking, told a seminar here Sunday (May 1, 2011).

The programme was organised by the Muslim Educational Social and Cultural Organisation and the Arabic Language and English Education Foundation.

“The Islamic banking industry, which is operating for the past 30 years in the Middle East, has gained popularity and curiosity around the globe during the financial crisis of 2008.

“Despite the financial turmoil that crippled so many large Western institutions, Islamic banks continued to grow in prominence and size. Right now, about 500 such institutions operating in 75 countries, including Britain, the US and China,” Shahid said.

According to Shahid, the main objective of Islamic finance is to create a society of investors, unlike the conventional banking system, which has created a society of borrowers and lenders over the past hundreds of years.

“In the Islamic banking concept, the banks involve themselves in real-time trading or investment activities with their customers based on various contracts. It is for all religions, anyone can have an account in it and get the benefits,” he said.

All the products that these banks offer are Sharia-compliant and a Sharia board decides or monitors what sort of investments the banks can make.

He added that Islamic banking in India will not only benefit the marginalised and the minorities in terms of microfinance, but can also attract major investments from the Gulf countries.

Kerala is the only state where Islamic banking has begun after the high court permitted it in February.

(Courtesy: IANS, May 1, 2011)

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