The committee on financial sector reforms, which was set up by the Planning Commission to recommend various ways to take the country’s financial sector reforms forward, has included in its yet to be submitted report a few points pertaining to Islamic banking. The final report has two pages referring to themes like equity financing in place of charging interest on lending – a key principle of Islamic banking. Vijay Mahajan, chairman of Hyderabad-based micro finance organisation Basix and one of the members of the committee, reportedly said, “While interacting with representatives of the Muslim community in Mumbai, we thought it proper to add these issues to ensure that the community also becomes part of financial inclusion in the country.”
Another factor that motivated the committee to include suggestions on Islamic banking was the Sachar committee report, which has also outlined the Muslim community being a victim of financial exclusion, said Mahajan. “We have recommended that micro-equity financing as a product should be included in mainstream banking. All banks and microfinance institutions should offer these micro-equity financing products,” he added.