Direct Remittance of Subsidy to the BPL Families
Letter to the Prime Minister of India Dr. Manmohan Singh, 19 June, 2009
The Committee on Financial Sector Reforms headed by Dr. Raghuram Rajan had submitted its report to you on 12 September, 2008. Inter-alia, the Committee had recommended that measures be taken to permit the delivery of interest-free finance on a large scale, including, through the banking system. The Committee has suggested appropriate measures for the creation of a suitable framework. Although support to the idea of interest-free banking has been expressed by various authorities, no progress appears to have been made in creating the frame- work through necessary amendments in the Banking Regulations as suggested by the Working Group on Financial Instruments for Islamic Banking set up by the Reserve Bank of India in July 2006. It appears that since the Working Group and the Committee on Financial Sector Reforms, the matter stands at a standstill
Interest-free banking has both an external and internal dimension. It shall bring enhance participation of the Muslim Community, which does not fully access banking products and services due to reasons of faith and thus bring into the developments process its frozen capital. The external aspect is to place India in a position to compete effectively with other countries, some in the region, in attracting capital from the Gulf.