Islamic banks plan to set up base in Tamil Nadu soon

Interest-free Islamic banks could be a solution to the current global crisis, according to the Chennai-based Islamic Banking Federation members, a consortium of four associations in Tamil Nadu. The Federation is bringing about the first formal Islamic Bank in Tamil Nadu very soon, after elections.

Interest-free Islamic banks could be a solution to the current global crisis, according to the Chennai-based Islamic Banking Federation members, a consortium of four associations in Tamil Nadu. The Federation is bringing about the first formal Islamic Bank in Tamil Nadu very soon, after elections. The Federation is currently in the process of getting the final nod from the Reserve Bank of India (RBI) to set up four organizations, Baithun Nasr Trust, Mana Muna Academy and the Azhagiya Kadan Trust in Chepauk and Pudupet. Sadique Batcha, organiser, Islamic Banking Federation said that it could be an alternative to the current economic problems. He added that the concept of having a formal Islamic banking system has not yet come to India. In the economic storm, the Islamic banks have globally come out really strong. The Gulf countries have been spared from the woes of crisis mainly because of Islamic banks. Iqbal, one of the members of the Federation said that while other traditional banks are reeling under losses, the Islamic banks are recording high growth in their operations.  Unlike the European and American banks, the essence in Islamic banking lies in not dealing with debt trading and market speculation along with the inherent principle in Islam that interest should not be collected for any kind of debt. The very concept of Islamic banking lies in combining moral value with commerce, said Sadiq Batcha. A member of the Federation explains Islamic banking as one, which follows the principle of Islamic law, prohibits the payment of fees for the renting of money for specific terms and where all forms of interest whether simple, or compound is prohibited.  Speaking to Express, Batcha said that Islamic banking is a viable option for India and Tamil Nadu will take the first formal step for the venture. He explained that as against the conventional banking system of accepting deposits and using it for lending, Islamic banking does not include paying of interest either to the depositor or collecting it from the borrower, the depositors instead will share the profits out of the lending that the bank makes. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3057&Cat=4&RetId=98