Making a strong plea for launching Islamic banking, Muddassir Siddqui, an authority on the subject, today said India should open interest-free banking windows in conventional banks as a pilot project.
Siddqui, partner and head of Islamic Finance, Middle East, SNR Denton and Company, told reporters here that there was lot of 'misunderstandings' regarding Islamic Banking in India. 'We are just asking for level playing field. We want it in conventional system. We do not want any favours,' he said.
On issues relating to recovery in cases of loan defaults in Islamic banking, he said it was done the same way as convetnional banking.
When it was pointed out that the Centre had in its counter affidavit in the Kerala high court on a connected petition on September 9 stated 'it was not legally feasible for banks in India or its branches abroad to undertake Islamic banking activities', he said discussions had been held with Union finance ministry officials and RBI regarding Islamic banking.
Recently, some documents were submitted to RBI. Several round of discussions had also been held with RBI officials, he said. 'We held close interactions with finance ministry and RBI officials. We hope the ice is breaking', he said.
There was no time frame for setting up Islamic banking. 'We are hopeful permission would be granted very soon,' Siddqui, here to attend a two-day conference on Islamic Finance in India starting tomorrow, said.
Currently, close to one trillion US Dollars was being managed by about 400-500 Islamic banks worldwide, he said.
Interest free banking system would offer a great opportunity to attract substantial investments from countries in the West Asian region to India, he said adding institutions and high net worth individuals there were looking forward to investment opportunties in India.
According to projections by global consultant McKenzie, investment surplus in the West Asian region is expected to be around nine trillion dollars by 2020. Currently the investment surplus is around $1.5 trillion.
India can attract a good portion of this by developing the appropriate regulatory framework, said Abdur Raqeeb, general secretary and convenor of National Committee on Islamic Banking of Indian Centre for Islamic Finance.
A two-day conference on Islamic Finance in India is being held from tomorrow to create awareness about the banking system.