Question from a Reader:
I want a home loan free of interest under Islamic law. Please give information of any bank or financial body in india.
Answer from IslamicBanking.info:
Unfortunately I don’t think you will find an interest-free Islamic loan in India. It seems that the Indian government is against allowing Islamic banking in India, or allowing Indian banks to engage in Islamic banking overseas. In fact I just recently read an article on IndianExpress.com in which the Minister of State for Finance Namo Narain Meena is quoted as saying,
“”RBI has informed that in the current statutory and regulatory framework, it is not legally feasible for banks in India to undertake Islamic banking activities in India or for branches of Indian banks abroad to undertake Islamic banking outside India.”
The government today said it is not legally feasible for domestic banks to carry out interest- free Islamic banking activities.
Islamic banking, of course, is based on the principles of Islamic law or Shari’ah. Two basic principles of Islamic banking are the sharing of profit and loss and the prohibition of the collection and payment of interest, known as ribaa. Collecting interest is not permitted under Islamic law.
The Indian government’s opposition to Islamic banking is a shame. The recent global economic crisis has proved that an interest-based economy carried heavy risks and places undue burdens on the poor. Islamic banking has genuine solutions to offer. The Indian government should not let bigotry or fear get in the way of economic programs that would benefit the Indian people. They should allow Islamic banking in India.
R Seetharaman, the Chief Executive Officer of Doha Bank, agrees that Islamic banking would be good for India. In a recent speech at a seminar on Islamic finance, hosted in Qatar, Seetharaman commented that Islamic banking is not just a financial system, but is part of a total value-based social system that seeks to enhance the general welfare of society as a whole.