Looking through the 'Islamic window': RBI's suggestion draws mixed reactions

While community members are polarised on the RBI’s suggestion to draw Muslims into the banking system, banks are vehemently opposed to the idea

(From left) Raihan Shaikh, Saeed Khan, Aamir Edresy and Amzad Shaikh discuss the RBI’s Islamic window proposal. Pic/Suresh Karkera
(From left) Raihan Shaikh, Saeed Khan, Aamir Edresy and Amzad Shaikh discuss the RBI’s Islamic window proposal. Pic/Suresh Karkera

A week after the government dropped its demonetisation bombshell, hoping to bring black money back into the country’s financial system, the RBI proposed the idea of an ‘Islamic window’ at banks to ensure ‘inclusion of those sections of society excluded because of religious reasons’. The suggestion, however, has drawn mixed reactions. While members of the community feel the move could be both beneficial and detrimental, banks are fervidly opposed to the central bank’s proposal.

Maulana Saiyad Atharali
Maulana Saiyad Atharali

Both good and bad
The community feels that the Islamic window will not just create more transparency, but take money out of the control of a few and disperse it to those in need. Maulana Saiyad Atharali, a noted leader of the community, said, “An equity-based system where the bank and customer work together will bring in transparency.”

Though some fear religious disputes over the window, the community begs to differ. “If we stop looking at everything from the religious point of view, things will be different. Around 70% of the country’s Muslims don’t register with banks because, for us, making more money [through interest] is unethical, and is hence treated as haram. This step will not just bring those 70% but also Islamic banks in Kuwait, Dubai and other gulf countries, into the banking system. Foreign capital is a big reason why the government has proposed it now,” said Aamir Edrasy, president of the All India Muslim OBC Association.

While Sharia forbids interest in any form, some community members said for the kind of system and society we live in, an interest of 5 per cent, called the ‘tolerable’ interest, is allowed.

Sharia says, but...
The Bohri community, which has a large business community, supports the RBI’s decision. “The RBI should certainly implement this plan. The late Syedna Dr Mohammed Burhanuddin had launched the Burhani Qardan Hasana scheme for Dawoodi Bohras in the 1960s. Under this, the account holders and those running the scheme share all profits and losses,” said Zoeb Bootwala, activist and a member of the Bohri community.

Nay-sayers
Mumtaz Shiekh, a well-known CORO (Committee of resource organisation) activist, has trashed the idea, saying opening a window is not the solution for inclusion. “There are people from slum pockets of Mumbai who find it extremely difficult to even open a bank account. Bankers come to the middleclass to open accounts, but the poor have to go to a bank 10 times to open one account. If you can’t solve that problem, how will this even work? I don’t believe it when community leaders say 70% of Muslims don’t open bank accounts. I am witness to a bank being flooded by Muslims when it was opened at Govandi. They are not averse to the interest system. Grass-root problems should be solved first before proposing such ideas,” Sheikh said.

Farhat Ali, from the NGO, Majlis, said, “The idea is a good one but this government proposing it just feels wrong. Muslims don’t trust this government at all.”

No need for word 'Islamic'
Though the Islamic window follows the guidelines of Sharia, Muslims don’t want the window to be tagged ‘Islamic’. Advocate Rashda Sohail Ainapore, who has studied Islamic banking in depth, said, “As long as it takes care of the needs of the people, why does it have to be called anything? This window is a must in present times. The 150 million Muslims out of the system will start coming in with the money, which in turn will prove lucrative for the entire country.”

Bharat Nayak, a Khar resident, said, “Indian texts also talk about an interest-free economy. Why name it Islamic window then?”

At the end of the day, if it is a beneficial plan, the public will not hesitate to go to an Islamic window, believes Subhajeet Mukherjee from Charkop. “I would not bother which religion’s framework it is in, as long as it keeps my business alive and gives me benefits?”

Thumbs down from banks
Banks, however, have panned the idea. “The RBI hasn’t communicated this to us yet, but we are sceptical about whether this will work,” said a State Bank of India official. A senior official of Bank of India said, “The idea is against secularism. If we keep allowing this, more and more religions will want their personal laws to be implemented. And, this would only put pressure on banks. But, if the RBI tells us, we will have to implement it.”

What the RBI has proposed
The Reserve Bank of India (RBI) recently wrote to the Finance Ministry proposing the opening of an ‘Islamic window’ in conventional banks for the gradual" introduction of Sharia-compliant or interest-free banking in the country. The introduction of full-fledged Islamic banking with profit-loss sharing complex products may be considered at a later stage on the basis of experience gained in course of time, the RBI’s letter said.

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