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What does mean by Islamic banking? Whether it is applicable in India OR not?

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What does mean by Islamic banking? Whether it is applicable in India OR not?
posted Mar 21, 2015 by Amit Kumar Pandey

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1 Answer

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Sharia prohibits acceptance of specific interest or fees for loans of money (both fixed or floating is against the Islamic teaching) . Islamic banking is banking or banking activity that is consistent with the principles of sharia or in short 'Islamic banking' is 'Sharia compliant finance'.

In the 20th century, scholars, Naeem Siddiqi, Maulana Maududi, Muhammad Hamidullah, proposed a banking system based on the concept of Mudarabha – Means a relationship in which one contributes capital and other contribute expertise to earn profit and sharing the profit at 50:50 ratio which is as per Islamic teaching and also make cash availability to the business. This system is called Islamic Banking.

Islamic Banking is not applicable in case of India and as per RBI Governor Subba Rao (2013) "We got to see that Islamic Banking which does not allow charging interest or taking of interest is inconsistent with our existing laws... All that I am saying is Islamic banking is not consistent with current banking laws"

answer Mar 21, 2015 by Salil Agrawal
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