Modi Government Rejects RBI’s Idea of Islamic Banking

The Finance Ministry has rejected RBI’s proposed idea of Islamic Banking since it feels that their Government had already introduced many inclusive schemes like Jan Dhan Yojana and Suraksha Bima Yojna for all it’s citizens. Minister of State for Finance Santosh Kumar Gangwar also made a statement in Lok Sabha which suggested that to introduce Islamic Banking in India, there are several legal hurdles.

It was a committee headed by Raghuram Rajan (who later became the RBI Governer), submitted a report to the UPA Government in 2008, without mentioning Sharia banking, suggested the need of having an interest-free banking model in India. It was earlier in May this year that RBI had brought in a clearance to Islamic Banking in India.

This idea of Islamic/Sharia Banking has now been rejected by an inter-departmental group set up by the Reserve Bank of India (RBI).