‘What’s in a name’, Shakespeare had rhetorically questioned. We would say, pretty much, in constitutionally secular India. If we tell you ‘participatory’ or ‘ethical’ interest-free banking is going to be launched in India soon, you will applaud such a people-friendly initiative.
The praises would double when we name Prime Minister Narendra Modi as the initiator of this set up. But the admiration would instantly change into accusation the moment we tell that the interest-banking is actually, a form of Sharia-compliant Islamic banking.
The Saudi Arabia-based Islamic Development Bank has launched operations in Gujarat, the PM’s home state. The Indian Exim Bank and the Islamic Corporation for the Development of the Private Sector (ICD), a private-sector arm of the IDB group, has reached an agreement as part of deals signed during PM Modi’s trip to Saudi Arabia in April.
The IDB is an international investment organization, based in Jeddah. It does not charge interest on loans or pay interest on deposits; instead the lender shares a part of the profit – or loss – with the borrower. It’s interesting to note that the banking doesn’t work with industries that deals with things banned in Islam, such as liquor and gambling.
But some BJP leaders are not happy about the introduction of Islamic banking, although it is open for all, notwithstanding their religious beliefs. PM Narendra Modi, who is otherwise loved by India’s Hindu population for his staunch nationalist views, is criticized for resorting to minority-pleasing tactics. These naïve detractors, who blame Modi for forgetting his “Hindu followers”, are angry that the PM is bringing in Islamic things.
Apart from deep-seated Islamphobia, its plain ignorance that’s making some people edgy about getting a Shariya-based banking. And the irony is that they have resorted to India’s secularism to protest against IDB; basically use the secularism card to oppose a religion-based banking system.
BJP’s Subramanium Swamy, a Harvard-trained economist and a Rajya Sabha member, has called for the immediate dismissal of central banker Raghuram Rajan, blaming him for the RBI’s decision to allow Islamic banking.
Lest we forget, Modi’s decision to bring in ‘participatory’ banking is aimed at helping startups and other such small businesses, which can do well without having to worry about interest rates. A 2014 study by Ernst and Young found that assets under management by Islamic banks grew at an annual rate of 17% between 2008 and 2012 – three times as fast as those under management by standard commercial banks.
Agriculture expert and economist MS Swaminathan has stated that Islamic banking could break the cycle of high debt and interest payments in which small entrepreneurs, farmers and artisans often find themselves. If that happens, it would mean a great boon for India’s debt-ridden farmers.
If we need India to do great businesses, we need to get rid of this tendency to look at money with religion-tinted glasses. But yes, to mitigate Islamphobia, may be the RBI should refrain from labeling it as Islamic. It raises unnecessary communal temperature.
If certain things of a religious system make sense, why not introduce them as an option under a non-religious name, say ‘interest free banking’? It’s better not to give any rational system a religious colour, because money knows no religion.