In an unexpected move, India’s right-wing government has rejected a proposal to introduce Islamic Banking in the country. This move comes as a shock to the sector that has seen enormous growth worldwide in the past 2 decades. Islamic banking holds over $2 trillion worth of assets in Muslim countries and has been expanding its operations in the West.
Islamic, or Sharia banking, prohibits interest generation and making investments in businesses involved in gambling, alcohol, tobacco and the production of pork. It also forbids women from operating bank accounts without proper “male supervision.” Islamic banks offering Sharia-complaint services have often been accused of financing terrorism by “reverse money-laundering” for Radical Muslim and Jihadi groups.
India’s central bank justified its decision to block the Islamic banking by pointing out the discriminatory nature of these financial services towards the non-Muslims, saying the banking model does not offer “wider and equal opportunities” to “all citizens to access banking and financial services.”
The Indian government was also under huge political pressure from Hindu groups that were apprehensive of Islamic banking -- given its link to terrorism financing. In recent years, India, too, has been bearing the brunt of the Islamic Jihad that has been raging across the world. Since 2007, the Hindu-majority country has lost almost 5500 civilians and over 2700 security personnel to terrorism.
Indian broadcaster NDTV reported the Indian central bank’s decision:
In a major move, the Reserve Bank of India (RBI) has decided not to pursue a proposal for introduction of Islamic banking in the country. Replying to an RTI [Right to Information] query, the central bank said the decision was taken after considering "the wider and equal opportunities" available to all citizens to access banking and financial services. Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam.
The issue of introduction of Islamic banking in India was examined by the RBI and the government of India, it said. "Taking into account, the wider and equal opportunities available to all citizens to access banking and financial services, it has been decided not to pursue the proposal further," the central bank said in its reply to the RTI [Right to Information] application filed by a PTI [government news agency] correspondent.
In recent years, the city of London has emerged as a leading hub for Sharia-compliant finance outside the Muslim world. According to the British newspaper Daily Telegraph, UK banks offering “Islamic finance services surpassed $5 billion” last year.
Islamic banking has established itself in the US as well. In December 2016, CNBC described the “the rise of Islamic financial institutions” in the US as a “quiet financial revolution” that is taking place “under the radar of the public eye.”
To comply with the provisions of Sharia these banks are obliged to make “donations” to Islamic “charities.” This loophole can easily be manipulated to finance Radical Muslim organizations and Jihadi groups. If the West is serious about combating Islamic terrorism, it must find ways to dry up these sources of terrorism financing -- not welcome them.