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Plea on Islamic Banking in J&K: HC asks finance ministry, RBI to reply

The Forum also seeks direction to the J&K Bank to take immediate steps for the opening of Shariah-compliant windows to accomplish the objective of mass level participation in Shariah Banking.
D A RASHID
Srinagar | Posted : Jul 12 2018 1:26AM | Updated: Jul 12 2018 12:29AM
Plea on Islamic Banking in J&K: HC asks finance ministry, RBI to reply

The High Court has granted four more weeks to the Union Finance Ministry as well as Reserve Bank of India to respond to a Public Interest Litigation (PIL) seeking the introduction of Islamic Banking in Jammu and Kashmir.

A division bench of acting Chief Justice Alok Aradhe and Justice Dhiraj Singh Thakur granted more time to the Union Finance Ministry and Reserve Bank of India for the reply after the assistant solicitor general of India, Tahir Shamsi, made a submission in this regard.    

On behalf of Jammu and Kashmir Bank, senior advocate, Zaffar Shah told the court that the bank has unnecessarily been made a party as it doesn’t see a role for itself in Islamic banking. He, however, said that the bank will file response with regard to its Non-Performing Assets (NPAs).    Jammu and Kashmir People’s Forum, a non-government organization, wants J&K Bank Limited to place before the court the entire details of NPAs and the steps taken for the recovery of the outstanding amount in NPAs, saying the same is public money which cannot be allowed to be misappropriated either by the account holders or by the management of the bank.

The Forum also seeks direction to the J&K Bank to take immediate steps for the opening of Shariah-compliant windows to accomplish the objective of mass level participation in Shariah Banking.

On March 20 this year, the Court had issued notices to the Union Ministry of Finance, RBI, J&K government and the J&K Bank asking them to respond to the PIL.

 “In 2013, Ministry of Finance had requested RBI to give its considered opinion regarding feasibility of introducing Islamic banking in India after examining all the legal, technical and regulatory issues relating to the matter. Accordingly, an Inter- Departmental Group (IDG) on Islamic Banking was constituted in RBI and the report prepared by the Group has been submitted to the Government in February 2016,” pleads the Forum. 

“RBI has also forwarded a Technical Analysis Report based on the recommendation of the Group to the Government in December 2015.”

On the basis of the recommendation of the IDG, the Forum said, it has been suggested by the RBI that a few products similar to conventional banking products may be considered for introducing through Islamic Window of the conventional banks after necessary notification by the Government.

“Since the respondents have failed to adhere to the reports of their own committees and expert groups in materializing the recommendations for creation of Shariah Compliant windows, it was left with no other option but to seek intervention of the court,” the Forum pleads. 

The majority of the citizens in Jammu and Kashmir, it says, is Muslim by faith and thus has a constitutional right to enjoy all avenues of development provided the same do not contravene the article of their faith.

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