{"id":1106,"date":"2019-10-28T13:36:01","date_gmt":"2019-10-28T13:36:01","guid":{"rendered":"https:\/\/jobbinghood.com\/finance\/2019\/10\/28\/indian-banks-should-exploit-untapped-potential-in-islamic-banking-experts\/"},"modified":"2019-10-28T13:36:01","modified_gmt":"2019-10-28T13:36:01","slug":"indian-banks-should-exploit-untapped-potential-in-islamic-banking-experts","status":"publish","type":"post","link":"https:\/\/jobbinghood.com\/magazine\/2019\/10\/28\/indian-banks-should-exploit-untapped-potential-in-islamic-banking-experts\/","title":{"rendered":"Indian banks should exploit untapped potential in Islamic banking: Experts"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<p>\u00a0<\/p>\n<div class=\"article-image\">\n<figure><img fetchpriority=\"high\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-1747875 size-full\" src=\"http:\/\/www.financialexpress.com\/wp-content\/plugins\/a3-lazy-load\/assets\/images\/lazy_placeholder.gif\" data-lazy-type=\"image\" data-src=\"https:\/\/images.financialexpress.com\/2019\/10\/bank-2.jpg\" alt=\"Indian bank, Islamic banking, Islamic banking potential,\u00a0Shariah,\u00a0Shariah banking\" width=\"660\" height=\"440\" srcset=\"\" data-srcset=\"https:\/\/images.financialexpress.com\/2019\/10\/bank-2.jpg 660w, https:\/\/images.financialexpress.com\/2019\/10\/bank-2-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/10\/bank-2-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/10\/bank-2-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><noscript><img decoding=\"async\" class=\"wp-image-1747875 size-full\" src=\"https:\/\/images.financialexpress.com\/2019\/10\/bank-2.jpg\" alt=\"Indian bank, Islamic banking, Islamic banking potential,\u00a0Shariah,\u00a0Shariah banking\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2019\/10\/bank-2.jpg 660w, https:\/\/images.financialexpress.com\/2019\/10\/bank-2-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/10\/bank-2-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/10\/bank-2-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><\/noscript><span class=\"article-caption\">According to Abdur Raqeeb, general secretary of the Indian Centre for Islamic Finance, an organisation pushing for Shariah banking in India, Islamic banking has the potential to contribute towards greater financial inclusion besides providing support to small and medium sized enterprises.<\/span><\/figure>\n<\/div>\n<p>Indian and foreign banks should exploit Islamic banking\u2019s untapped potential to ensure the financial inclusion of \u201cunbanked\u201d populations excluded by the existing financial system, several experts have said. Islamic banking is a finance system based on the principles of not charging interest, which is prohibited under Islam.<\/p>\n<p>\u201cResearch shows that the Islamic finance sector continues to grow and evolve in size and complexity, with Islamic banking offered in more than 60 countries worldwide. It is an excellent opportunity for Indian\/foreign banks to expand their footprint in India by venturing into this largely untapped sector,\u201d said Islamic banking expert Hazik Mohamed. He said Shariah instruments like bonds (more accurately, sukuk) and funds that are looking at Shariah-compliant investments will be able to meet the needs of Muslim investors from within India and externally from other parts of the world.<\/p>\n<p>Islamic finance, including its interest-free and equity-based banking system, can complement the existing Indian banking and finance system, said Hazik, who has spent the last decade researching financial systems to understand the various types and causes of financial crises. He is currently developing various solutions to reduce such events by implementing Shariah principles through digital technology.<\/p>\n<p>\u201cAs an alternative financial system, Islamic finance will provide Indian consumers (Muslim and non-Muslim alike) an alternative system to meet their banking needs,\u201d Hazik said.<\/p>\n<p>For example, an Islamic investment product is typically asset-backed and has additional Shariah rules to curb it from sub-prime quality and equity-based rather than debt-based, which makes it financially more stable and contractually-vested to limit rogue and speculative behaviours, he explained. Hazik said Islamic banks show certain advantages over conventional banks.<\/p>\n<p>\u201cIslamic banks\u2019 greater resilience to crises and shocks compared to conventional banks are based on empirical data from countries such as Egypt, Indonesia, Malaysia, Pakistan, Turkey, UAE (GCC) where both types of banks exist,\u201d he said.<\/p>\n<p>The Reserve Bank of India (<a target=\"_blank\" href=\"http:\/\/www.financialexpress.com\/tag\/rbi\/\" rel=\"noopener noreferrer\">RBI<\/a>) has decided to not pursue a proposal for introduction of Islamic banking in the country. Replying to an RTI query filed by PTI in 2017, the central bank had said the decision was taken after considering \u201cthe wider and equal opportunities\u201d available to all citizens to access banking and financial services.<\/p>\n<p>According to Abdur Raqeeb, general secretary of the Indian Centre for Islamic Finance (ICIF), an organisation pushing for Shariah banking in India, Islamic banking has the potential to contribute towards greater financial inclusion besides providing support to small and medium sized enterprises.<\/p>\n<p>If Islamic banking is introduced, he said, the inadequate labour capital ratio for informal sector workers associated with agriculture and manufacturing industries could be resolved through equity finance, which might be a revolution in the Indian agriculture and unorganized sector.<\/p>\n<p>\u201cWith improved labour capital ratio, our vulnerable workers associated with agriculture and unorganized sector might be able to compete effectively with the formal sector workers. Thus Islamic banking may financially empower majority of Indian workers,\u201d Raqeeb said. Asked about roadblocks behind not starting Shariah-based banking in India, he said Islamic banking has unfortunately been misunderstood in India as a religious charitable venture restricted to the country\u2019s Muslim community.<\/p>\n<p>\u201cThere is a misconception that Islamic banking is beneficial for Muslims only and not for all. In Malaysia, more than 40 per cent of the investors and 60 per cent borrowers are non-Muslims. In Kenya, a predominately non-Muslim country, banks such as Gulf African Bank have indicated that as much as 20 per cent of the customer base is non-Muslim,\u201d Raqeeb said.<\/p>\n<p>According to him, in the Indian stock market, the Jain community more than Muslims has invested in Shariah compliant stocks like <a target=\"_blank\" href=\"http:\/\/www.financialexpress.com\/auto\/new-cars\/tata\/\" rel=\"noopener noreferrer\">Tata<\/a> Ethical Fund and Taurus Ethical Fund.<\/p>\n<p>\u201cEven the first halal product \u2013 IBA cosmetics \u2014 was produced and sold by two Jain sisters in Ahmedabad,\u201d claimed Raqeeb. \u201cNomenclature of Islamic banking remains a point of concern for regulators and policy makers. A proper Indian name can be given to terminology of Islamic banking system,\u201d he said, adding that \u201cParticipatory Banking\u201d has been recommended by the Reserve Bank of India RBI in technical analysis of its interdepartmental report of 2014.<\/p>\n<p>Referring to the recommendations of the Committee on Financial Sector Reforms (CFSR) headed by <a target=\"_blank\" href=\"http:\/\/www.financialexpress.com\/tag\/raghuram-rajan\/\" rel=\"noopener noreferrer\">Raghuram Rajan<\/a>, Raqeeb said the RBI and government of India have implemented several suggestions of the panel.<\/p>\n<p>The panel had also recommended interest free banking to be introduced into the banking system, citing it to be in consonance with the objectives of inclusion and growth with innovation.<\/p>\n<div class=\"common-bottom-text\">\n<p>For latest coverage on <a href=\"https:\/\/www.financialexpress.com\/elections\/maharashtra-election-constituencies-list\/\" target=\"_blank\" rel=\"noopener noreferrer\">Maharashtra Assembly Election 2019<\/a> and <a href=\"https:\/\/www.financialexpress.com\/elections\/haryana-election-constituencies-list\/\" target=\"_blank\" rel=\"noopener noreferrer\">Haryana Assembly Election 2019<\/a>, log on to <a href=\"https:\/\/www.financialexpress.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">financialexpress.com<\/a>. 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Like us on <a href=\" https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\" https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>[ad_2]<br \/><\/p>\n<div class=\"jobbi-after-content-jh-placement jobbi-entity-placement\" id=\"jobbi-1068139266\"><div id=\"jobbi-2499406740\"><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-5862940809620110\" crossorigin=\"anonymous\"><\/script><ins class=\"adsbygoogle\" style=\"display:block;\" data-ad-client=\"ca-pub-5862940809620110\" \ndata-ad-slot=\"\" \ndata-ad-format=\"auto\"><\/ins>\n<script> \n(adsbygoogle = window.adsbygoogle || []).push({}); \n<\/script>\n<\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>[ad_1] \u00a0 According to Abdur Raqeeb, general secretary of the Indian Centre for Islamic Finance, an organisation pushing for Shariah banking in India, Islamic banking has the potential to contribute towards greater financial inclusion besides providing support to small and medium sized enterprises. Indian and foreign banks should exploit Islamic banking\u2019s untapped potential to ensure [&hellip;]<\/p>\n","protected":false},"author":348,"featured_media":1107,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-1106","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance"],"_links":{"self":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1106","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/users\/348"}],"replies":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/comments?post=1106"}],"version-history":[{"count":0,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1106\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media\/1107"}],"wp:attachment":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media?parent=1106"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/categories?post=1106"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/tags?post=1106"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}