Islamic Banking in India
Islamic banking (or participant banking) is banking or financial activity that is consistent with the rules of sharia law and its practical application through the expansion of Islamic economics. Sharia prohibits the set or floating payment or perhaps acceptance of specific fascination or fees for financial loans of money. RBI has knowledgeable that in the present statutory and regulatory construction, it is not legally feasible for banking companies in India to undertake Islamic banking actions in India or intended for branches of Indian banks abroad to attempt Islamic banking outside India. The Banking Regulation Action of India does not adapt to Islamic bank because it permits banks to borrow from and deposit money with the RBI on curiosity. But we are in correspondence with the government on how the laws could be restructured or amended so they really are in conformity with Islamic financial laws high is no question of interest. Funds is a bad for trade in the Islamic banking thought. Islamic banks distribute the net income from re-investing the money from the investors in business activities and so on. And so, traders are responsible to share chance of damage also along with revenue. But , the chance of damage is not shared with shareholders in the traditional banking program. Effects of Islamic banking if introduced in India:
* Will give inclusive growth along with control over pumpiing. * Because of such financial loans a growth can be witnessed in the agriculture and unorganised sector. * Through equity loans it can help in reduction of the burden of keeping current account and fiscal account deficit under control. * It can decrease terrorism by involving young Muslim youths in financial sector. * They disallow indebt people by taking further loan hence reducing the probability of bankruptcy.; Unfavorable points linked to Islamic banking:
* Insufficient Standardization
5. There are variations in Theory & Practice.
2. Loopholes exist in its correct implementation.