Islamic banking is a very, very bad idea for India

The RBI has given approval for a non-banking finance company (NBFC) by Kerala State Industrial Development Corporation called Cheraman Financial Services Limited (CFSL) . The organization will be Sharia compliant and I think this is a very bad idea in India.

I am a believer of democracy and a separation of state and religion. Religion in India has become a huge problem with political mobs routinely holding the state hostage toward their ends. Time and again, national interest is subjugated to the security concern of angry mobs and time and again, the state has bowed its head.

This, in effect abandons the interest of the common man in favor of criminal elements in a macabre compromise, where law and order becomes secondary to preventing harm. Be it the Bajrang Dal vandalizing an art exhibition by Pakistani artists or Muslim mobs stoning an embassy over a film made on another continent. Criminals rarely meet justice and the interest of people across religions gets subjugated to the most vulgar interpretation of religious interest.

In effect, the condition boils down to religion getting respect strictly based on its nuisance value.

In such a state of the country, my belief is that attaching religious connotations to a bank is very dangerous. The RBI must have the power to dictate operations of banks as needed. I do not see this as possible from a security perspective if the RBI tries to impose anything Muslim fanatics dislike. The entire discussion will be brought down to the question of RBI contradicting the Quran and a nice topic for Muslims worldwide to band over. And at that point, cancelling permissions for Islamic banking too will be interpreted as an attack on Muslim rights or something.

Then the right wing will be bringing up issues over who gets employed or who benefits from the loans, and so on.

Perhaps this may never happen. Perhaps it will happen soon. In my view, there is no need to bring religion into banking.

If there is merit in a method of banking that is interest free or with the qualities of Islamic banking, they should be adopted by a newly created banking system that officially does not recognize any religious text or system. Even if the guiding principles of Islamic banking are copied exactly, they must not be called Sharia compliant or Islamic banking. Official documents must only recognize the RBI bank as the authority over its operations. Period. The official history of the bank can mention Islamic banking as an inspiration, but no religion should have the authority to claim power over the working of a bank. Period.

This is not about hating Muslims. I know for a fact that most Muslims are embarrassed and terrified of angering the fanatics among them.

I don’t care how many countries Islamic banking works in. I know my government has continually proved ineffective when religion tramples law.

This is simply about loving my country enough to insist that there must not be any threat created to its authority over organizations within it.

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Vidyut

Vidyut is a blogger on issues of National interest. Staunch advocate of rights, learning and freedoms. @Vidyut

5 thoughts on “Islamic banking is a very, very bad idea for India

  1. The underlying principles of Islamic banking can be seen in the Holy Bibile too, i.e. taking or giving interest is prohibited. But none of the Christians follows this principle. I understand your point that a banking system based on religion is not acceptable in a secular democratic country like India, i.e why they brought it under the name of Interest Free Banking system. Even the UK is a democratic country, and they follow religion based banking, but not lunatic as ours. Let people choose what banking system they need. I feel, interest free banking will help India to boost its economy.

  2. Respected Sir ,
    i think you are unaware of the fact that taking of interest is not allowed in Islam, this system will be helpful for the people to get some financial help at no interest whatsoever, this will help the economically backward people. Muslims in general in the country have very poor economic and financial status. This will help in uplifting the weaker section of the society. It wont be compulsory on everybody to have an account in such banks, its their wish. Most of the Muslims i think will be happy with the banks in which they have their accounts because they make extra money. So, there is nothing to fear about a parallel economy.

    I know this might irritate you but what about the laws in different states preventing or banning cow slaughter. why do you think that law was passed or are in existence, why no law to prevent slaughter of chicken, goats, fish, arent these life forms created by god.
    I think i have provided with a good point to ponder upon, so that you can another article about repealing the laws banning the cow slaughter, and i think you will because you are a staunch believer in rights and freedom.
    Just think it not just the hindus, who live in this country, a large number of christians, and many people in the noth east also eat beef, down south in tamil nadu plenty of hindus also eat it. If you think i am lying just come here and see it to believe it.
    You just want to criticise somthing for the sake of it. I have many hindu friends and few muslim friends, and i am not anti hindu activist.

  3. at first you need to study about Islamic Banking , Indian economical situation, and researches about the india economy, then you can understand why India needs Islamic Banking. You know one thing it is not only based on islam, but its basic is islam. there is nothing to happened by adopting islamic banking in india other than growth in GDP.

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