Islamic banking finds path in India

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Mumbai—In a first in the mainstream banking sector in Maharashtra, a cooperative bank controlled by BJP leader and state cooperation minister Subhash Deshmukh has launched Sharia-compliant Islamic banking. Interest-free deposits will be accepted from both Muslims and non-Muslims and distributed largely to the needy from the minority community at zero rates of interest to ensure their financial inclusion.
So far, the Lokmangal Cooperative Bank Ltd, controlled by Deshmukh, has distributed Rs2.50 lakh to poor Muslims through the route. The minister will now call on other banks and financial institutions in Maharashtra to follow suit and adopt this model, which is also referred to as “participatory banking”.
“Under Islamic banking policy, depositors are not paid interest. Similarly the borrowers too will not be charged any interest for the money lent,” Deshmukh, who is the chairman of the bank, told dna. The bank has nine branches, including eight in Solapur and one in Pune, and Deshmukh, a MLA from Solapur (South), said all of them would get a separate counter for such Islamic, interest-free deposits and loans.—Agencies