Islamic Banking and Finance in India : Opportunities and Challenges

Abstract

The current economic policies in many countries have been questioned by eminent economists and policy makers since worldwide economic down turn. The Muslim economists strongly believe that the global financial crisis is resulted from mismanagement of monetary policy and bank’s higher interest rate policy by the lack of socio economic objectives. Therefore, many secular nations find the Shariah banking system is an alternative economic mechanism for bringing economic stability in their nations. In India too, we have started many discussions for Islamic bank in the nation due to bad performance of our economy during the crisis period. The eminent economists in India suggest that Islamic bank can play a greater role in her fast moving to become an economic super power in the world. In India, Muslim population constitutes 13.4% of total population of the country and most of them keep far distance from country’s financial activities due to high domination of ‘interest ‘in our economy. Government and RBI appointed different committees to study the grasping opportunities for Islamic banking in India. But all committee advised them that opening up of Islamic baking are impossible in our current banking regulation Act of 1949. In this case, the global Islamic banking industry has to remove all its barriers to extend its operation in all over India.