New Delhi: In a major move, the Reserve Bank of India (RBI) has decided not to pursue a proposal for introduction of Islamic banking in the country.
Replying to an RTI query, the central bank said the decision was taken after considering “the wider and equal opportunities” available to all citizens to access banking and financial services.
Islamic or Sharia banking is a financial system based on the principles of not charging interest, which is prohibited under Islam.
The issue of introduction of Islamic banking in India was examined by the RBI and the government of India, it said.
The RBI was asked to provide details of steps being taken for the introduction of Islamic or ‘interest-free’ banking in India.
Prime Minister Narendra Modi had on August 28, 2014, launched Jan Dhan Yojana, a national mission to bring about the comprehensive financial inclusion of all the households in the country.
In late 2008, a committee on Financial Sector Reforms, headed by former RBI governor Raghuram Rajan, had stressed on the need for a closer look at the issue of interest-free banking in the country.