India offers vast scope for Islamic banking

Most of the South Asia countries including Pakistan, Sri Lanka, Bangladesh and Maldives engaged with Islamic finance, still Indian Financial industry is struggling to open the door for Islamic finance industry though few attempts were done by some small groups. The following content is about Untapped Islamic banking market in India.

From Gulf News

Islamic banking may be in for some windfall gains if a reported move by Indian authorities to introduce some form of interest-free banking, aimed at bringing the country’s unbanked Muslim populations into mainstream banking, bears fruit.
If the initiative is taken to its logical conclusion, the Indian banking sector too stands to gain significantly as it will add huge numbers of new customers, while opening up a channel for substantial fund flow from regions such as the Gulf.
The Indian banking sector, which grabbed international news headlines last week, although for the wrong reasons — a nation-wide strike by employees of public sector banks and figuring in the controversy centering on Iran sanctions-related breaches by some international banking majors — however, provided some clues to the outside world about the kind of clout it enjoys in terms of customer base and business volumes.

Read more at : http://gulfnews.com/business/opinion/india-offers-vast-scope-for-islamic-banking-1.1066528

India looks to start Shariah-compliant financial products

India needs to actively consider allowing introduction of Shariah-compliant

Islamic finance products to channelise savings of the muslim community, K Reh-man Khan, deputy chairman of Rajya Sabha, said onTuesday.

Speaking at the India Shariah Finance Summit in the capital, Khan said the mutual fund industry is the best vehicle for popularising Shariah-compliant products. He pointed out that mutual funds are largely compliant with Islamic finance principles since they do not pay

interest.

The concept of charging or paying interest is prohibited under Islamic law. “We should start adopting the mutual fund route in a bigger way for Islamic banking. Shariah-compliant mutual fund schemes will help to channelise savings of the huge Islamic population in India,” Khan said.

Khan said Indian Muslims should have the option to invest in Shariah-compliant products. “Muslims have every right to seek an avenue for investment that complies with their religious faith,” he said.

Speaking on the occasion, Abizer Diwanji, executive director and head of financial services, KPMG, said the mutual fund sector could be opened up for Shariah-compliant products. “The present laws are amenable to mutual fund instruments that are compliant with Islamic finance. However, innovation in the industry is lacking and hence such products are not hitting the market,” he said.

Diwanji said bringing out Islamic finance products would be a step towards greater financial inclusion.

“Muslims are an underbanked community in India. Islamic finance could be a very big component for financial inclusion that the government is pushing for,” he said. Muslims account for around 13.4 per cent of the population or around 175 million people in absolute terms. Diwanji said the Reserve Bank of India could also consider offering specialised licences for Islamic banks, while doling out fresh bank licences as promised in the Union budget.

Sashi Krishnan, chief investment officer, Bajaj Allianz Life Insurance, which offers — Pure Stock Pension Fund –a Shariah-certified scheme, said Islamic financial products have seen growing acceptance in India over the past few years.

“The government is already working on a project to analyse the future of interest-free banking in India, while the mutual fund and insurance industry are also developing Shariah-compliant products,” he added.

Krishnan said the challenges to the popularity of Islamic finance in India are distributors who are not equipped to sell Shariah-compliant products, besides a lack of certifying agencies and standardisation of Shariah-based products. Islamic finance products to channelise

savings of the muslim community, K Reh-man Khan, deputy chairman of Rajya Sabha, said onTuesday.

Speaking at the India Shariah Finance Summit in the capital, Khan said the mutual fund industry is the best vehicle for popularising Shariah-compliant products. He pointed out that mutual funds are largely compliant with Islamic finance principles since they do not pay

interest.

The concept of charging or paying interest is prohibited under Islamic law. “We should start adopting the mutual fund route in a bigger way for Islamic banking. Shariah-compliant mutual fund schemes will help to channelise savings of the huge Islamic population in India,” Khan said.

Khan said Indian Muslims should have the option to invest in Shariah-compliant products. “Muslims have every right to seek an avenue for investment that complies with their religious faith,” he said.

Speaking on the occasion, Abizer Diwanji, executive director and head of financial services, KPMG, said the mutual fund sector could be opened up for Shariah-compliant products. “The present laws are amenable to mutual fund instruments that are compliant with Islamic finance. However, innovation in the industry is lacking and hence such products are not hitting the market,” he said.

Diwanji said bringing out Islamic finance products would be a step towards greater financial inclusion.

“Muslims are an underbanked community in India. Islamic finance could be a very big component for financial inclusion that the government is pushing for,” he said. Muslims account for around 13.4 per cent of the population or around 175 million people in absolute terms. Diwanji said the Reserve Bank of India could also consider offering specialised licences for Islamic banks, while doling out fresh bank licences as promised in the Union budget.

Sashi Krishnan, chief investment officer, Bajaj Allianz Life Insurance, which offers — Pure Stock Pension Fund –a Shariah-certified scheme, said Islamic financial products have seen growing acceptance in India over the past few years.

“The government is already working on a project to analyse the future of interest-free banking in India, while the mutual fund and insurance industry are also developing Shariah-compliant products,” he added.

Krishnan said the challenges to the popularity of Islamic finance in India are distributors who are not equipped to sell Shariah-compliant products, besides a lack of certifying agencies and standardisation of Shariah-based products.

source : mydigitalfc

Plea to expedite interest-free Islamic banking

A joint delegation of Rajasthan Muslim Forum and the Indian Centre for Islamic Finance met Union Minister of State for Finance Namonarain Meena in New Delhi on Saturday to discuss with him the feasibility of interest-free Islamic banking in the country.

Experts in the delegation brought to Mr. Meena’s notice a recommendation of the Union Government’s Committee on Financial Sector Reforms, headed by Raghuram Rajan, for creation of a framework for interest-free banking. They said the new banking system would not only be viable for the coun-try but also beneficial for underprivileged sections of society.

The delegation’s members included Indian Centre for Islamic Finance general secretary H. Abdur Raqeeb and Jamat-e-Islami Hind Rajasthan president Mohammed Salim, who is also a member of the Rajasthan Muslim Forum.

The delegation pointed out that large sections of Muslim population in different States had kept themselves away from conventional banking because of their religious faith not allowing transactions involving interest. Their investments could benefit the national economy if interest-free banking was permitted in the country.

Mr. Salim said the noted agricultural scientist, M. S. Swaminathan, had recently observed that Islamic banking could be the solution to farmers’ suicide in Vidarbha. About 40 per cent customers of Islamic banking institutions in Malaysia and 20 per cent in Britain are non-Muslims.

Mr. Abdur Raqeeb submitted to the Union Minister the documents relating to methods and techniques adopted by modern and secular countries to create a level playing field for conventional and Islamic banking. “When London, Tokyo, Singapore and Hong Kong can become hubs of Islamic finance, why not Mumbai or Cochin?” he asked.

The delegation said in a statement that Mr. Meena assured of looking into the issue seriously and promised that he would hold detailed discussions with the officers of his department in this connection.

source : hindu

Muslim clerics launch Islamic investment advisory board, pitch for Islamic banking

New Delhi: India’s eminent Islamic clerics today pitched for introduction of Islamic banking and financial system in the country while opening to the public the Islamic Investment & Finance Board, an advisory committee headed by clerics to assist both corporations and markets as well as common people regarding Shariat-compliant investment and finance.

“Islamic Finance and Ethical investments are gradually evolving into one of the most important asset classes in the financial services industry in the world today. This is seen as an alternate to the failure of conventional financial system to achieve the higher objective of bringing economic justice. Another driving force for this phenomenon is the sheer size of the Indian Muslim population who are looking for alternate interest free financial system,” said Mufti Mohd. Yahya Qasmi, Member, Islamic Investment & Finance Board (IIFB), at the national conference titled “A Search for an Alternate Financial System” at India Islamic Cultural Centre in the National Capital today.

Building on the strong fundamentals and importance of the alternative investment & finance, Islamic Investment & Finance Board was evolved under the leadership of Maulana Mohammad Wali Rahmani, Sajjada Nasheen, Khanqah Munger and Secretary of All India Muslim Personal Law Board, said Mufti Qasmi while introducing the IIFB and opening the conference.

The primary responsibility of the board is to ensure that all the Islamic Financial products made are Shariah compliant as an alternate means. The work of IIFB will be supervisory to guide and advise the financial corporation regarding Islamic investment and finance including Islamic Banking. The board upon going through the Shariah validity of financial products presented by financial corporation would certify the financial products after a thorough examination according to the Shariah compliant criteria. The IIFB Board shall have continuous dialogue with economist, bankers and other scholars to assess the feasibility of new proposals and assisting in project development and execution of new financial products in compliance with Shariah Principles. IIFB also makes sure that the work of an organization is Compatible with Shariah rules according to the accredited and agreed legal opinions (Fatwa), Mufti Yahya said.

The IIFB comprises prominent Ulama such as Maulana Khalid Saifullah Rahmani, General Secretary of Islamic Fiqh Academy- India, Maulana Fuzail ur Rahman Hilal Usmani Panjab, Maulana Fuzlur Raheem Mujeddi Jaipur, Mufti Shoibullah Khan- Bangalore, Mufti Ahmad Nadir Al-Qasmi, Mufti Ajaz Arshad Qasmi, Mufti Riyaz Ahmad Qasmi Munger, Mufti Anwarul Haque Qasmi, Mufti Mohd Yahya Qasmi and Market Expert Imtiaz Merchant.

Addressing the gathering Maulana Khalid Saifullah Rahmani said interest is prohibited not only in Islam but also in Christianity and Hinduism. Islamic banking system which will be free from interest will have little risk for the common people. He said that to fix benefit and dividend and to not accept the risk of loss is unnatural.

H Abdur Raqeeb, Convener, National Committee on Islamic Banking and General Secretary, Indian Centre for Islamic Finance demanded the government to allow Islamic Banking system in India as many many European countries and US have done. He said he has met RBI Deputy Governor and Union Finance Minister Pranab Mukherjee. Both have given positive response. For introduction of Islamic banking in India, the present Indian banking law will have to be amended. So he urged the gathering to meet their local MPs and convince them about Islamic financial system.

Talking to TwoCircles.net on the sidelines of the program, stock market professional Tauqeer Anjum from Chennai-based stock broker ITI Financial Services Ltd. said in the last few years there has been rise in number of people who are coming to enquire about Shariat-compliant stocks. His company though does not have any such index, however provides the Muslim investors with information about Shariat-compliant shares and products where they can invest. Excerpt.

Stock market professional Tauqeer Anjum

Do you get Muslim customers/investors who want to know from you about Shariat-compliant products/shares in which they want to invest?

Yes, such people come though in limited number and they want to invest but they have no option or alternative to work, they do not have full information either.

Do you see rise in number of people who are coming to enquire about Shariat-compliant shares?

Yes, for the last five years I have found rise in the number of such people. Earlier I was with MK stock broker and now with ITI Financial Services Ltd for some years. A lot of people come to get information about shares which are not based on interest and are completely Shariat compliant. They show interest in equity shares.

Do you have any list of Shariat-compliant products and shares?

We do not have any such index, but we have information about Shariat-related shares and share this information with the investors who want.

Can you name some companies/products in which Muslims can invest without fear of getting involved in interest?

Sun Pharma, Reliance Industries, Reliance Capital, Dabur these are some stocks/companies in which we can invest.

Such programs are necessary. We in the share market seek to get information about Shariat-compliant finance. We got information about this program. And I am here to attend it.

source : two circle