Call to allow Islamic banking in India

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NEW DELHI, Sep 2 (PTI): Islamic banking, which prohibits use of money for vices like gambling and wine as also levy of interest, could provide long term funds to India-which needs over USD 400 billion for creating new infrastructure.
Asking the government and regulators to allow Islamic banking, bankers at a two-day conference said financial products without interest payment could be successful as has been demonstrated by the mutual funds industry.
Islamic banking is a USD 700-800 billion industry and is growing at 10-15 per cent to stand at USD two-three trillion in the next decade, Rajya Sabha Deputy Chairman K Rahman Khan told reporters after the conference, summing up views expressed at the event.
The country has been looking at using pension funds and foreign exchange reserves, among others, to finance infrastructure projects.
Islamic banking is a participatory banking, he said, clarifying that it does not mean that only Muslims could participate in such a system.
Citing an example, he said although Muslim population in UK was not very large, Islamic banking has billions of dollars worth transactions.
This system of banking would also provide financial alternatives to Indian Muslims, 70-75 per cent of whom do not deposit money in banks because of religious beliefs, he said.
With over 150 million, India is the second largest home in the world to Muslims after Indonesia.
Khan said a delegation of bankers called on Finance Minister P Chidambaram, who said the government always welcomes new ideas.
He quoted Chidambaram as saying that an Reserve Bank of India-constituted group is looking into the issue.