RBI decides not to pursue Islamic banking in India

The issue of introduction of Islamic banking in India was examined by the RBI and the government of India, the central bank said.

Considering the wider and equal opportunities available to all citizens to access banking and financial services, the Reserve Bank of India (RBI) has decided not to pursue Islamic or interest-free banking in the country.

For the uninitiated, Islamic or Sharia banking is a finance system based on the principles of not charging interest (prohibited under Islam).

The issue of introduction of Islamic banking in India was examined by the RBI and the government of India, the central bank said.

"Taking into account, the wider and equal opportunities available to all citizens to access banking and financial services, it has been decided not to pursue the proposal further," it said in its reply to the RTI application filed by a PTI correspondent.

In late 2008, a committee on Financial Sector Reforms, headed by former RBI governor Raghuram Rajan, had underlined the need for a closer look at the issue of Islamic banking in the country.

"The non-availability of interest-free banking products results in some Indians, including those in the economically disadvantaged strata of society, not being able to access banking products and services due to reasons of faith," the committee had said.

Source: PTI


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