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RBI, govt exploring introduction of interest-free Islamic banking

Mumbai: Reserve Bank of India (RBI) and the govt are exploring introduction of interest-free banking, also known as Islamic Banking, to financially include sections of the society that remain excluded due to religious reasons. “Some sections of Indian society have remained financially excluded for religious reasons that preclude them from using banking products with an element of interest.” Towards mainstreaming these excluded sections, it is proposed to explore the modalities of introducing interest- free banking products in the country in consultation with the govt,” RBI said in its annual report for 2015-16. Islamic banking is a financial system based on the principles of not charging interest, which is prohibited under Islam. Globally, Islamic banking has witnessed a significant increase, especially in the wake of the financial crisis. It is an accepted fiancial business in many countries including UK and Singapore.   

This article appeared in The Milli Gazette print issue of 16-30 September 2016 on page no. 15

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