Islamic banking is not permissible under existing rules, RBI Governor D. Subbarao said at a function in Kochi. Mr. Subbarao said the State government had put forth a suggestion to make use of Islamic finance and RBI had studied the proposal. “We appreciate the objective, but there are some legal problems,” he said. The rules would have to be changed if Islamic banking was to be allowed, he said. Alternative channels were available now to utilise the funds from outside, he pointed out, without elaborating further. Earning interest on deposits is prohibited under Islamic banking. Instead, the money could be utilised for enterprises and the profit earned from their functioning could be shared by investors. There had been offers of Islamic funding schemes from NRIs and groups in the Middle East and other countries.
Rules To Be Changed If Islamic Banking Was To Be Allowed: Subbarao
Islamic banking is not permissible under existing rules, RBI Governor D. Subbarao said at a function in Kochi. Mr. Subbarao said the State government had put forth a suggestion to make use of Islamic finance and RBI had studied the proposal.
