A country that claims to be secular should not participate in a banking system that emerges strictly in the name of religion. India has its own normal and consistent banking system, so establishing an alternative of this magnitude is alarming. It is with great horror to 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.
Islamic banking is not prevalent in Islamic-majority countries, even in Saudi Arabia. The establishment of this type of banking is not beneficial for the Indian economy and the inclusion of Muslims in India. Additionally, it does not invest in its community and help women have more opportunities to be financially stable.
Islamic banking may seem like a great option for the Muslim community, but its deceptive practices can be detrimental bankers. 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 flock to this idea 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 through other means. 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 emphasizes the notion that Sharia and Islamic banking charge interest under the guise of “Islamic garb”. He calls this practice dishonest.
Another major flaw of the banking system is the fact that they could deny or fund businesses as they please and based on how they interpret the Qur’an. This style of banking can lead to predatory-like tactics, such as denying women accounts for any reason or funding extremist activities. Denying women access to ways to save, invest, and support themselves continues to 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 its 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.
The practices of Islamic banking does not guarantee economic or personal wealth accumulation. There was little attention drawn to the bankruptcy of the Canadian Islamic bank situation, but this particular circumstance points to a flawed method of banking. 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 stabilizes, studies (pdf link) show the economy thrives when there is open and free markets, namely conventional banking.
The solution is clear. People should be on guard against Islamic banking as a means to infiltrate an already established banking system in India. People should be on guard against Sharia law as a whole and not allow Sharia law to creep into the daily facet of their lives.
Sharia law has proven to be merciless toward women and Islamic banking would not be any different. Islamic banking would not propel women and the Islamic community forward, but would keep them behind our national and international counterparts.
