With the global financial crisis putting the spotlight on "casino capitalism" of the West, leading scholars and experts from the Arab world on Thursday pitched for interest-free Islamic banking in India, home to the world's third largest Muslim population.
Tracing the genesis of the global meltdown to "greed and unscrupulousness" of financiers and speculators in the West, Umar Chapra, adviser Islamic Development Bank, Jeddah, said the crisis resulted from "excessive and imprudent lending."
"Islamic finance puts emphasis on equity and justice. Islam discourages debt and the charging of interest on debt," Chapra said at an India-Arab conference, organized by the Indo-Arab Economic Cooperation Forum and Institute of Objective Studies, at the India Islamic Culture Centre.
Chapra stressed that under the Islamic system, financial capital is deployed for creating development in society and is consistent with the principles of Islamic law (Sharia) which prohibits the payment or acceptance of interest for the lending and accepting of money respectively.
Pitching for Islamic banking in India, Abdul Azim Islahi of Islamic Economics Centre, King Abdul Aziz University, at Jeddah, pointed out that some of the earliest research on Islamic banking came from scholars at Osmania University in Hyderabad and Allahabad University in Uttar Pradesh.
Agreed Monzer Kahf, consultant of Islamic Banking and Finance in Qatar. "Islamic finance is not Islamic; it belongs to all of humanity," he said.
India is keen to attract investment from oil-rich Gulf countries in its burgeoning infrastructure sector and is, therefore, looking afresh at proposals for introducing Islamic financial services in the country.
Recently, K. Rahman Khan, deputy chairman of Rajya Sabha, India's upper house of parliament, had told the Financial Times that the ruling Congress Party is proposing reforms to the finance ministry, the Reserve Bank of India and Securities and Exchange Board of India to allow for the introduction of Islamic financial services.
A large number of around 150 million Muslims in India - the third largest Muslim population in the world after Indonesia and Pakistan - prefer to stay away from commercial banks due to religious proscriptions against interest-driven banking.
Making a case for Islamic financial products in India, Shailendra Kumar, CEO of Eastwind Capital Advisors, said that before the meltdown, most of the funds from the Gulf were going to the US, UK and Malaysia. Now, after the meltdown, India, the world's second fastest growing economy, is seen as a safe investment bet in the Gulf, he said.
Many companies from the Gulf are wary of investing with gambling or alcohol companies, activities proscribed by Sharia.
Speaking at the seminar, Minister of State for External Affairs Shashi Tharoor Wednesday called for greater FDI into India from the Gulf region, which has around $3-4 trillion disposable revenues.
The values of interest-free Islamic banking are finding greater recognition. China, which has around 80 million Muslims, recently gave its first licence for Islamic banking to the Bank of Ningxia.