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Thursday, 11 December 2014

Islamic banking in PDP’s manifesto

After Peoples Democratic Party released its manifesto, I directly went to their website to download their ‘aspirational agenda’. By definition ‘manifesto’ is a document of aim and plan which gives hints about how a party views politics.

Though I will not discuss the whole document of fifty-eight pages, I will straight go to page thirteen (titled ‘diversifying personal finance options’). It was an awesome moment to grasp that one of the leading political party of J&K sees the role of non-banking financial companies can play in restructuring our economy by way of offering nationally accepted products which are sharia complaint-an important step towards developing sharia-complaint finance in the state.

Islamic banks in India do not function under banking regulations act; therefore we cannot have a full-fledged Islamic banking system. They are licensed under non-banking finance companies hence we can start some of the options by way of setting NBFCs. In 2013 RBI allowed a firm in Kerala to operate as a NBFC that follows Islamic principles known as Al Barakah financial services. Though being a matter of fact that unless and until full-fledged Islamic banks are permitted, an Islamic finance sector will find it hard to develop. But still we can hope that the initiative will pave its way towards the main area of focus.

The participation of sharia complaint NBFCs in J&Ks banking system will lead to further infrastructural development in state. In today’s world Islamic banking is gaining more importance in different parts of the world. If Islamic banking is opened in J&K it would benefit the state, as that money which is still lying in the banks, if invested in the Islamic bank would improve the economic conditions of the people. An interest free banking would help to improve the education and would help in more employment.

It should be well kept in mind that Islamic bank is not related to Muslims only it is related to all as the main focus of it is on social well-being and wealth generation activities in the society. The system of conventional banking which leads to debt crises, poor becomes poorer and the rich richer, inflation becomes rampant and the education turns out to be expensive, is equally criminal to all faiths.

There is also no doubt that no political party has converted 100% of their manifesto into reality. And in Kashmir the analysis of previous political manifestoes in terms of fulfilling them can even be ranked below average. Now it will be a test for the PDP, if coming to power will they match their ‘walk with talk’ in terms of setting of NBFCs based on sharia? But I personally welcome them for assigning one page in their manifesto for this people friendly initiative. And I hope if coming to power they will start their office with this work.

(Kashmir Reader / 11 December 2014)
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