India is planning to overhaul the regulation of its financial system to attract investments from the Gulf and to encourage its largely unbanked Muslim population to save money in a way compliant with their religion, a senior government adviser said on Thursday.
K. Rahman Khan, deputy chairman of India’s upper house of parliament, told the Financial Times that the ruling Congress party had proposed the introduction of Islamic financial products.
The party was seeking regulatory approval from the finance ministry, the Reserve Bank of India and Securities and Exchange Board of India for a move to capture one of the fastest growing sectors in the financial services industry, he said.
“Islamic finance has been growing at a steady pace and it is the most attractive form of alternative [banking] system in the financial sector, it makes no sense for India to exclude itself from this success story,” Khan said.
With more than 150 million Muslims, India has the world’s largest Muslim minority.
Many Muslims are discouraged from banking with commercial banks as Islam has restrictions on interest payments and investing in sectors such as gambling and drinks groups, according to the Institute of Objective Studies, a research group focusing on the Muslim community.
Some Western and emerging economies are taking steps to facilitate Islamic investment.
China, with 80 million Muslims, recently awarded its first licence for Islamic banking to Bank of Ningxia.
The Congress party’s report, which Khan said had been endorsed by Manmohan Singh, India’s prime minister, falls short of backing the creation of a fully-fledged Islamic banking sector at a time when regulators are shy of liberalisation.
Khan said that the “main goal at the moment is to help set up non-banking institutions that will allow Indian citizens to save and invest in a Sharia-compliant manner and to attract foreign direct investment from the Gulf. At a later stage we will be looking into setting up Islamic banking.”
Enthusiasm
India is keen to attract a greater share of Gulf investment. The UAE is already one of India’s largest trading partners. Political and business leaders in the region have expressed their enthusiasm for larger investments in the Indian economy.
Shaikh Nahyan Bin Mubarak Al Nahyan, the UAE’s minister of education and a leading Arab investor, predicts India will become a “world economic power”.
“While countries around the world continue to feel the pinch of the economic downturn, India’s economy is buoyant and in relatively good condition. Investment opportunities abound in this vast, innovation-driven country,” he said.
0 Comments:
Post a Comment