New Delhi : The Islamic Shariat prohibits the Muslims take interest on money deposits that keep them away from the banks’ schemes offering interest on savings, deposits and investments. It may soon change as the conventional banks may offer them an interest-free window.
A committee set up by the Reserve Bank of India (RBI) under the chairmanship of its executive director Deepak Mohanty, a reputed economist, has recommended such accounts to address the Islamic inhibitions. The committee on medium term path for financial inclusion as a medium 5-year action plan was constituted in July in pursuant to Prime Minister Modi asking the RBI to rope in the Muslims to invest in banks. It is not for the first time that the interest-free banking has been recommended in India. The committee notes that a committee on financial sector reforms (CFSR) prepared by then economic adviser Dr Raghuram Rajan had also come out with recommendations on the interest-free banking products. Since Dr Rajan is now the RBI governor, he may push the banks to throw open schemes to the Muslims for the interest-free deposits. The Mohanty panel says the commercial banks may be allowed to open specialisted interest-free window for public by adopting products like demand deposits, agency and participation certificates for deposit mobilisation and cost-plus financing and deferred payment, deferred delivery contracts for profit generation. It means the stakeholders share profits an losses.
The committee noted that the footprint of interest-free finance is growing fast in many big banks across the world, though it so far received a lukewarm response in India and now it’s a time for change. Explaining how it will work, the committee said in interest-free banking, the bank accepting deposits of money from the public is not engaged in lending as a purely financial activity but undertakes operations on the basis of profit and loss sharing by engaging in equity financing and trade financing.
The RSS has already deputed its three senior “pracharaks” in Uttar Pradesh for the last two years and as such indications are that Shah will pick up one of them to head the state unit.
Pracharak Dilip Ghosh, who was named the poll-bound West Bengal unit president last month, says nothing wrong in pracharaks running the party as they can do it more efficiently, ignoring the usual pulls and pressures.
