The banking regulator, Reserve Bank of India, has declined the suggestion to launch Islamic banking in the country. Talking about it, RBI Governor, Mr. D. Subbarao said that the central bank has ruled out the possibility of introducing Islamic banking in India. He further clarified that still, other ways of mobilizing funds based on the ideologies of Islamic Law can be explored.
Subbarao said, "Islamic banking is not possible." He added that RBI could consider some other modes of mobilizing funds from non-resident Indians (NRIs), which are based on the principles of Islamic Law.
On the matter, he said, "There are some legal problems. We have studied the issue. We appreciate the objectives behind the request. It can be got around not through banking, but other vehicles." Reportedly, RBI and government have had many discussions regarding this. He also mentioned that launching Islamic banking was not possible due to the lack of a separate law governing Islamic Banking.
It is reported that the RBI Governor had received a request from the Chief Minister of Kerala, Oommen Chandy on this matter. The CM had told him that Kerala had many NRIs who were willing to contribute towards the development of the state and so there should be a way of mobilizing their funds.It should be noted that Kerala High court had approved Islamic banking in the state.