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Sat Mar 02 2024, 06:37 AM

Islamic Ideology ( 9 Feb 2011, NewAgeIslam.Com)

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Islamic banking is not for Muslims alone

New Age Islam News Bureau


According to the General Secretary of Indian Centre Islamic Finance Dr Abdur Raqeeb, the recent court verdict in favour of Islamic banking could well pave the way for Islami banking in India. Recently, the High Court rejected a petition against Islamic banking project in Kerala saying that the project undertaken by Al Barakah was established in the interests of the people of the state and was not related to propagation of any religion. It is an organisation for the economic development approved by the secular structure of the country.

It should be noted that Subramaniam Swamy and a representative of an organisation called Hindu Ved, Mr Babu had filed a Public Interest Litigation against Al Barakah Financial Services Limited saying that the state funds could not be used for establishing an organisation of a particular religious community in a secular country. But the High Court dismissed the case.

In fact Kerala needed foreign investment for the development of its infrastructure. A big population of Kerala lives in Gulf countries out of which 50 per cent is Muslim. Muslims send about Rs 20,000 crore to the country every year. The money sent by the Muslims and non-Muslims from the Gulf countries was not being used for economic development. Only 0.45 per cent of the foreign money went to Kerala government. So the Kerala government thought that if non-interest banking system was introduced in Kerala, huge foreign investment could be attracted to the state which will not only benefit the common man but also help build infrastructure of the state. Therefore, the Kerala State Industrial Development Corporation asked a famous international consultancy firm called Earnest to prepare a report on the establishment of a Islamic Bank. They presented a report which said that instead of an Islamic Bank, a non-banking financial corporation could be set up. Based on the report, the Kerala government took the initiative and Al Barakah Financial Services came into existence. The organisation consists of 13 Muslim NRIs and big businessmen of Kerala including two representatives of the Kerala Industrial Development Corporation. It was decided that the SIDC would have a share of only 11 per cent and the rest 89 per cent will go to private investors. Dr Md Ali Gulfar, a famous personality of Kerala and a big enterpreneur of Oman was appointed its President and P C Menon became its Vice-President. After that KSIDC issued an advertisement for the post of a CEO who would work according to the instructions of and under the Sharia Advisory Committee. It was after the publication of the advertisement that Mr Subramaniama and Mr Babu filed the petition challenging the move.

The Kerala government accepted the case and advised KSIDC to stall its work till the judgment. Eminent lawyer Rajiv Dhawan fought the case on behalf of the Al Barakah while renowned senior advocate L Nageshwara Rao represented KSIDC. Mr Dhawan and Mr Rao told the court that Al Barakah was a financial organisation that will work on non-interest basis and will benefit both the Hindus and Muslims alike. According to the Article 27C of the Constitution, the government has the authority to regulate or restrict the activities of political, social and economic organisations. After a lengthy debate the High Court adjudged that the organisation had been established with the purpose of economic development of the state and was not meant for any religious activity.

The Kerala High Court’s judgment is a very important judgment as it will open new vistas for non-interest Islamic banking in the country.

Mr Abdul Raqeeb said that the global recession had attracted the Western and European countries towards Islamic banking adding that Islamic banking was not beneficial for Muslims alone but would benefit the non-Muslims as well. Today, non-interest banks are being run in Britain, France, Singapore and Hongkong successfully. We should benefit from their experience. Indian Centre for Islamic Finance has made a lot of efforts towards introducing Islamic banking in the country. Consultations have been made with the Directors of the Reserve Bank of India and the Finance Minister. Letters were written to the Prime Minister and the KSIDC was with Al Barakah during the case and finally the Kerala High Court gave the judgment in their favour. It is a green signal for Islamic banking in India but according to Mr Abdur Raqeeb a lot has still to be done in this direction.