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IDB unit to persuade RBI on Islamic banking

Islamic Corporation for the Development of Private Sector, a unit of Saudi Arabia’s Islamic Development Bank, said it will persuade the Reserve Bank of India to introduce Islamic finance in India as an alternate way of finance. The unit’s chief executive Khaled Mohamed Al-Aboodi said in Mumbai his firm would like to understand RBI’s views on Islamic finance in general and if it feels it is applicable to India, the unit would be very happy to support it. He said he would be meeting RBI officials and discussing the issue with them. There can be ‘collaboration’ on making the apex bank understand the concept and benefits of Islamic finance, he added. He said the problem of bad loans is very minimal in Islamic finance because the bank, which owns the collateral ‘loaned’ to the borrower, works as a partner rather than as a financier alone. Islamic finance can also help the small businesses and is of help from the stability perspective, he said, adding this stream of finance was unaffected by the 2008 global credit crisis, he added. He also hinted that the IDB is keen to start interest-free lending in India, which can be done through setting up of a special fund which allows it to undertake activities in non-member countries.

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