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Why India Should Have No Room For Islamic Banking

03/01/2017 2:13 PM IST | Updated 23/01/2017 8:41 AM IST
Fayaz Kabli / Reuters

As the world becomes more enlightened and aware of the terror imposed by radical Islamists, mostly due to ISIS, many people living under Sharia law-controlled regions have been familiar with its oppressive ways for as long as they can remember. There are many stark differences between Christianity and Islam. However, both religions seem to agree that corruption can be birthed from greed and the love of money.

This type of banking is not beneficial for the Indian economy and nor for the inclusion of Muslims (including women) in India.

A country that claims to be secular should not participate in a banking system emerging from religion. India has its own normal and consistent banking system, so establishing an alternative in the form of "Sharia banking" is alarming. It is to the great horror of those who love freedom and democratic values that the Reserve Bank of India (RBI) has floated the idea of an "Islamic window" in banks to promote a, "gradual" introduction of Sharia-compliant or interest-free banking in the country."

There is no shortage of examples that prove there only needs to be a small window of opportunity for Sharia law supporters to heavily influence and oppress regions. In this case, the window of opportunity is Islamic banking. The establishment of this type of banking is not beneficial for the Indian economy and nor for the inclusion of Muslims in India. Additionally, it does not invest in its community and help women have more opportunities to be financially stable.

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Islamic banking may seem like a great option for the Muslim community, but its deceptive practices can be detrimental. According to Firstpost, Islamic banking is built on the premise that Sharia law prohibits charging interest. Therefore, Islamic banking claims to offer interest-free banking and functions on the principles of the Qur'an, particularly Sharia law.

Muslims and those not able to use conventional banking may find the idea appealing on these principles alone. However, a bank must make profits in order to have money to lend people and sustain its practice. In order for the Islamic banking system to work, they must upsell items. For example, if a person needs a loan to purchase something, the Islamic bank will purchase that item and sell it to the customer for more money. This loophole exists to earn a profit from customers while technically not charging interest on a loan or payment. Muhammad Saleem, former CEO of Park Avenue Bank in New York, wrote a book entitled Islamic Banking—A $300 Billion Deception, in which he emphasises that this kind of banking involves charging interest in an "Islamic garb". He calls this practice dishonest.

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Another major flaw of the banking system is the fact that they could deny or fund businesses as they please, based on how they interpret the Qur'an. This style of banking can lead to dubious tactics such as denying women accounts for any reason or funding extremist activities. Denying women access to ways of saving, investing and supporting themselves will prevent them from accomplishing their own goals and improving their quality of life. Those who are not Muslim are subject to unfair business and banking tactics, such as higher costs of sale transactions. By controlling how people spend and manage their money, Islamic banks have an opportunity of spreading radical worldviews amongst others. While the Banking Regulation Act prohibits the establishment of a competing banking system, radical Islamists are known for changing laws once they have a foothold in a region.

This style of banking can lead to dubious tactics such as denying women accounts for any reason or funding extremist activities.

The practices of Islamic banking do not guarantee economic or personal wealth accumulation. Consider the bankruptcy of a leading promoter of Sharia banking in Canada. Consumers should look at this example as a foreshadowing of what could happen if this type of banking system becomes the preferred banking system. Even though the face of banking is changing as new technology develops and the global economy stabilises, studies show the economy thrives when there is open and free markets—namely conventional banking.

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The solution is clear. People should be on their guard against Sharia law as a whole and not allow it to creep into the daily facets of their lives. Sharia law has proven to be merciless toward women and Islamic banking is unlikely to be any different. Sharia banking will not propel women and the Muslim community forward, but will have quite the opposite effect.

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