Sharia Banking and Indian scenario

Recently, the RBI has expressed its intention to introduce "Islamic Banking Windows" in Indian commercial banks and also proposed the same to the Central government. On reading abut this I decided to take a deeper look at what Islamic banking was all about and why RBI wanted it in Indian banks.

Islamic Banking/ Shariat Banking:
Islamic banking basically follows 2 main principles in consonance with the Shariat Law:

• Sharing both profit and loss 
• Ban on paying and receiving "interest" by borrowers as well as lenders alike, as interest or "Riga" is against the Shariat Law and believed to be exploitative.

The Islamic Banking owes its foundation to the Islamist doctrine of two people(in the present times)

• Indian-born Abul Ala Maududi of the Jamaat-e-Islami  
• Hassan al-Banna of the Muslim Brotherhood in Egypt

Muhammad Saleem a former president and CEO of Park Avenue Bank in New York and a critic of Islamic banking says "Proponents of Islamic banking say that Islam bans all interest. But an understanding of pre-Islamic and Islamic history and keeping in mind the context would lead one to conclude that what the Quran bans is usury, not interest. Usury can be defined as interest above the legal or socially acceptable rate. Phrased differently, usury is the exploitative, exorbitant interest rate."

Financial Inclusion:

RBI has quoted financial inclusion of a group of people who are in minority as one of the reasons for introduction of IB into Indian Commercial banks. 

But the need of the hour is to conduct a socio-economic survey and find out the number of people among the Muslims who are out of any kind of financial inclusion schemes of the GOI like the JAM trinity. If it is found that considerable number people from the community have voluntarily stayed out of the financial mechanism of the country due to lack of Islamic banking facilities, then introduction of Islamic banking in the commercial banks may be considered after consultation with experts and stakeholders.