Islamic financing is the only solution for the global economic crisis currently threatening the world's largest countries, says a financial expert from India, who is currently visiting the Kingdom. H. Abdur Raqeeb, who is the convener of the National Committee on Islamic Banking, Indian Center for Islamic Finance (ICIF) said that the world is gradually realizing and accepting the significance of the Islamic finance system as a solution to untangle the crisis. Abdur Raqeeb, who is in the leather export business, has devoted much of his time to implementing an Islamic banking system in India. “My goal is to improve human welfare which can be achieved only through implementing an Islamic finance system. Basically, the purpose of my visit to the Kingdom is to create awareness among the Indian expat population here about the relevance of Islamic economics in India and to meet with Islamic banking giants in the Kingdom, such as, Al-Rajhi, IDB and other banking experts,” he told Saudi Gazette in an exclusive interview. “Islamic banking is most beneficial to the marginalized sections of society. European countries, like Britain, have started many Islamic financing systems. Since 2005, several Islamic banks have been established in Britain, and London has become a center of Islamic banking. Prime Minister Gordon Brown wants to make Britain the ‘gateway to Islamic finance and trade'. The UK treasury and the Japanese ministry of finance are seriously exploring the potential use of ‘Sukook' (Asset based bonds) as a debt management tool in the wholesale sterling and yen markets. The Islamic financial system has received such recognition in the West that even the Vatican has proposed Islamic finance principles to Western banks as a solution for the worldwide economic crisis,” Abdur Raqeeb said. “Islamic banking is the need of the hour. It is all about equity and justice and sharing and caring. But unfortunately, people, including Muslims, are unaware of this divinely ordained economic system. Islamic banks are not for Muslims alone. One in five of the applicants for some of the products of the Islamic banks in Britain is a non-Muslim,” said Abdur Raqeeb. He has been working for many years to bring about reforms in the banking regulations in India which act as a major stumbling block to the introduction of Islamic financing in India. “In the Indian scenario, India is an emerging global economic powerhouse and has displayed a very steady and high growth rate. We have enormous human resources with abundant technical and managerial skills. Direct investment, portfolio investment and venture capital investments are at an all time high. But on the other hand, a large section of the population is left out of the prosperity net. There is a desperate shortage of equity and lease financing for micro and small enterprises. The relevance of Islamic financing in a country like India is that it ensures equitable and fair distribution of monetary resourses to all the sectors, especially the marginalized section,” Abdur Raqeeb explained. The government of India has appointed a senior team headed by Ananda Sinha who is the chief general manager in charge of the department of banking operations and development to study the feasibility of introducing Islamic banking in the country. On September 12, 2008, the Raghu Ram Rajan committee submitted a report on financial sector reforms and the committee recommended interest-free banking in India. “More efforts are needed to convince the Reserve Bank of India, the parliamentarians and the general public about the benefits and utility of the Islamic banking system for the comprehensive growth of all sectors in India,” Abdur Raqeeb said. “The Indian Banks Regulation Act of 1949 says that no banks can be run without interest. Our prime goal is to persuade the authorities to amend this rule in order to accommodate Islamic financing in the banking sector of the country,” he said. “In the midst of the current downturn, there is little liquidity except in the Gulf region. There are plenty of funds with the Non Resident Indians in the Middle East. After 9\11, the Gulf countries are reluctant to invest in the West. These funds can flow into India, once India recognizes Islamic financing. There are two high profile multi-million dollar projects underway in Mumbai and other Indian cities from Middle Eastern countries,” he said. He added that according to GRAIL (the US market intelligence and data analysis provider) India has the potential of emerging as a significant market for Islamic Banking provided that there is a favorable change in the regulatory environment and increased awareness among Muslims and India as a whole. Abdur Raqeeb along with others who support his ideas organized a conference in New Delhi in February 2006 on the topic ‘Justice and Equity: The message of Islamic banking' which was well received with the participation of experts in the field, such as, the Islamic Development Bank's Dr. Umer Chapra; Dr. Monzer Kahf from the USA; and Dr. Mansoor Durrani from the Kingdom. “Some of the political parties, like RJD of Lalu Prasad Yadav, have included Islamic banking in their election manifesto and that gives us a ray of hope,” said Abdur Raqeeb. He has already visited most of the Islamic banks around the world and has communicated the need of Islamic banking in India.
