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.