By TCN News,
Jaddah, KSA: The Jeddah Chapter of Indian Forum for Interest-Free Banking (IFIB) submitted a memorandum to India’s Minister for External Affairs, Salman Khurshid, to draw the “attention to the hopes and aspirations of 2 million Indian expatriates working in Saudi Arabia to take a better decision on investment of their hard earned money in financial institutions of their choice.”
“Our Honorable Prime Minister Manmohan Singh’s important statement in Doha, Qatar, a couple of years back that India needed $ 500 billion for infrastructure investment in the next five years and that India sought Gulf investment that has encouraged us to hold a series of meetings in India and Saudi Arabia to reach a decision to take leads and initiatives in a hitherto untapped area: interest free financial ventures.
“Given the recent economic background where the world has seen worst ever global financial meltdown, we after much discussions and deliberations have come to the conclusion that instead of sticking to an interest-based system, channels should be opened for investment of NRIs hard earned money in an alternative but ethical system like the interest-free ventures, which we find as a cure for the current financial crisis” said K T A Muneer, Executive member of IFIB.
Governor of Reserve Bank of India, Dr D. Subbarao recently said RBI will not create any hurdle, if the Government of India allows Islamic Banking in the country.
The Memorandum suggested following factors for consideration:
· Interest-free Banking & Finance has functioning models in more than 70 countries around the globe. Many Western banks have opened Islamic banking windows and they cater to the needs of all faith communities.
· Their success has prompted even the Government of India to consider approval of Interest-free Finance as one among the solutions to present day problems faced by the Indian economy. (Ref: Raghuram Rajan Committee Report).
· The fundamental objective of the interest-free banking system is to eliminate exploitation of borrowers. It considers lending as an investment and distributes investment risk between the users and suppliers of funds.
Muneer said that the interest-free banking shall be a vital tool to achieve a Development and growth of the Indian banking sector, Foreign participation in large-scale infrastructure projects, Move into the league of major financial centers of the world, Active participation of some 20 percent Indian citizens living in the country and abroad in banking and financial activities, ethical financing based on sharing approach, which will help uplift the poor and boost SMEs, Creation of a conducive environment for effective implementation of the recommendations of Sachar Committee Report, helping a section of the society participate actively in financial and economic activity and realization of an immense underlying potential for growth and profitability through banking services for more than 20 crores of Indians.
“We believe the interest-free banking &financing systems have built-in protection as “it promises what it owns” instead of speculation and excessive risk-taking which were primarily the reasons for the runaway global collapse” he added.
“The Indian expatriates in Saudi Arabia are a huge potential force that if given a proper direction to invest their money, we will be able to pool a huge volume of funds that could be streamlined into productive areas which will positively change conditions of millions of the poor and downtrodden. It will also boost our nation’s GDP growth” said Amir Ali PM, yet another executive member of IFIB.
In our memorandum, we request the visiting minister to do the needful to open windows in existing commercial banks that facilitates expatriate Indians to invest their hard earned money, he said.
“We wish to introduce products like Micro-Financing, Installment schemes in Housing/Vehicle loans, Investments in Real Estates, Industrial Ventures and Agricultural, Live Stock/ Horticultural/Pisciculture Development projects and similar ventures in India wherein interest is not an integral part. This will help pool the savings of non-resident Indians, especially from the GCC countries, and contribute to the faster development of the nation” he added.
If a non-interest based Financing & Banking system is introduced in India like elsewhere in the world, India can attract Saudi Investors, businessmen and bankers to urge for opening of interest free Islamic finance options like Sukuk for infrastructure development in the emerging market like India.
During the recent Hajj Seminar at New Delhi Islamic Development Bank President Dr. Ahmed Mohammed Ali was gracious enough to promise that IDB would prevail upon Indian Finance Ministry and more particularly to Governor and other dignitaries of Reserve Bank of India and offered IDB’s services to formulate and accommodate Islamic finance & banking along with the conventional banking as done by IDB in several Non-OIC countries.
“We believe that Reserve Bank of India may advise any of the selected banks to introduce such interest-free investment and finance windows wherein the above activities will be done under the new system of ‘Profit & Loss Sharing’ with necessary exemptions to avoid double taxation/ stamp duty for undertaking leasing/hire purchase of affordable houses/flats,” said Amir Ali.
He added, “We anticipate His Excellency’s consideration and personal intervention in the matter by extending the necessary support for introducing the Interest-free Banking and Financial concept in our country” said Amir Ali.
On behalf of the Board of Directors, Memorandum was signed by P.K.Abdul Ghafour, President,IFIB, V.K. Abdul Aziz, Secretary General of IFIB and K T A Muneer, executive member.
The memorandum was handed over to the Minister by the executive members of IFIB, Usman Irumbuzhy, KTA MUuneer and Amir Ali PM, at a reception arranged by the Embassy of India at Hyat Park hotel, Jeddah, Sunday night. Mr. V. P. Mohammed Ali, Mr. Alungal Mohammed and Mr. Mullaveetil M. Saleem also were present.