Why should a democracy block Islamic banking?

Although efforts have been made over the past twenty years to bring Islamic banking into India — a country that has more Muslims than Pakistan — as yet the Reserve Bank of India and its master, the Union Finance Ministry, has not given permission for the same. The reason is simple. Across the financial establishment in India, the influence of US and EU financial interests is overpowering.

Several senior civil servants have their close relatives working in such institutions, and therefore accept the advice given by them. Certainly, banks in foreign countries will not want the Indian government to clear the way for the establishment of Islamic banking centres, for that may result in funds flowing from Zurich, London, Frankfurt and New York (all major “Islamic” banking locations) to Mumbai or Kochi. Acting on cue, the monetary and finance authorities in India have continued to block access to Islamic banking avenues, thereby denying millions of observant Muslims in India a chance to keep their assets in safety.

As has been mentioned earlier in these columns, the “British” law that boosters of the Nehru family such as Amartya Sen and Sunil Khilnani are so proud of pointing to is in reality English law for colonial subjects, a construct very different from English law for Englishmen. Continue reading