Community News

First Islamic Banking Service takes off in Maharashtra

Sholapur:  The first Islamic banking service has started functioning in the country in Sholapur city of Maharashtra, where Bashri branch of its Lok Mangal Bank has started this service. Muslims depositing money in this branch would neither be paid interest, nor those who obtain loan from it, would be charged any interest.

Sometime ago, Prime Minister Narendra Modi had hinted at starting Islamic Banking during his ‘Mann ki Baat’ programme. In this connection, the Reserve Bank of India had earlier submitted a proposal to the Central Government, which was finally accepted on 11 September. The decision to give practical shape to this concept was taken by Subhash Deshmukh, the Maharashtra Minister for Cooperative, Marketing and Industry, who is also the chairman of the Lok Mangal Bank. He inaugurated a branch of his bank at Bashri, from where Islamic Banking Service started. During this short period, 12 Muslims have been granted interest-free loans of Rs. 150,000. The recommendation to advance loans to these people was made by the same people who had deposited the money. The same policy would be adhered to in future also, which would make it easier for the Muslim community to get interest-free loans. This banking system, which runs according to the Islamic laws, is called Islamic banking. The peculiarity of this system is that neither any inerest is accepted nor charged. The profit obtained by these banks is distributed among the account-holders. It is also a principle of this bank that its money cannot be invested in any anti-Islamic activity. Such banks neither allow opening of accounts of people who are involved in illegal activities like gambling, wine-trade, terrorism etc., nor do they extend any credit to such people. In some countries, there is an advisory committee consisting of  Islamic scholars which oversees the operations of such banks. The world’s first Islamic bank was established in Malaysia in 1983. Thereafter, such banks were opened in many countries including Singapore, UK, UAE, Switzerland, Belgium, etc. Today the Islamic finance industry has crossed 1.6 lakh crore dollars. As against the interest-based system, Islam enjoins that the debtors and creditors both be part of such relationship as proportional share-holders, i.e., it is a system of participation in both profits and losses.

This article appeared in The Milli Gazette print issue of 16-31 October 2016 on page no. 15

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