Jammu and Kashmir Bank is willing to offer Islamic banking to customers in the state and would examine the proposal after taking the approval from the Reserve Bank.
The RBI has been hesitant so far to accept the idea of Islamic banking citing that it doesn’t fit in well with the existing banking regulations. However, it has initiated discussions with various stakeholders on this subject
Ahmad said the bank is yet to take up the issue formally with the central bank. “We have not given a serious thought to it. We will examine this idea and take up with RBI,” he said.
Ahmad’s assertion is echoed by Islamic scholars and a section of people in the banking industry, who say in the Muslim majority state of Jammu and Kashmir, people will naturally opt for Islamic banking.
Islamic banking is practiced in certain countries. The model follows Shariah law and differs from conventional banking on two main accounts since under this, payment or receipt of interest is prohibited. Also, it does not permit investment in matters that are considered sinful – like manufacture of alcohol, gambling and pornography. Besides, the model doesn’t accept deposits, only investments, which, more or less, make banking a venture capital activity.