RBI says no to Islamic banking proposal

Reserve Bank of India Governor D Subbarao ruled out introduction of Islamic banking in the country but said other methods for channelising funds based on the principles of Islamic law can be looked at.

“Islamic banking is not possible,” he said, adding the central bank could look at other vehicles based on Islamic banking principles to channelise NRI funds.

Replying to a question on the issue, Subbarao said, “We have studied the issue. We appreciate the objectives behind the request. But there are some legal problems.

It can be got around not through banking, but other vehicles.” He said that introduction of such banking was not possible in absence of a separate law for Islamic banking.

He said that Kerala Chief Minister Oommen Chandy had told him that there were several NRIs in Kerala who wanted to contribute to the development of the state .

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