Ahmedabad, Jun 1: The Saudi Arabia-based Islamic Development Bank (IDB) is set to start its India operations from Gujarat. The international financial institution which has its headquarters in Jeddah has chosen the home state of Prime Minister Narendra Modi to set up its first branch in India. The state will also get 30 medical vans as part of IDB's social sector initiatives.
Islamic Development Bank headquarters located in Saudi Arabia's Jeddah.
IDB's main objective is to foster the economic development and social progress of member countries as well as the Muslim community in accordance with principles of Shariah (Islamic law). The bank has 56 Islamic countries as its members.
The developments follow an agreement between India's state-owned Exim Bank and the Islamic Corporation for the Development of the Private Sector (ICD), a private-sector arm of the IDB group, as part of deals signed during Modi's trip to Saudi Arabia in April.
The IDB, a multilateral lender with an authorised capital of $100 billion, counts 56 Muslim nations as its members. Most of these countries belong to the Organisation of Islamic Cooperation.
ISLAMIC BANKING: SOME FACTS
- It is a finance system based on the principle of not charging interest, which is prohibited under Islam. Now, it goes by a more formal moniker – participatory banking.
- Instead of charging interest, the lender shares a part of the profit – or loss – with the borrower
- It is open to non-Muslims as well
- By 2020, the global Islamic banking industry profit pool is expected to reach $30.3 billion.
Its India operations will be led by Zafar Sareshwala, a prominent Muslim businessman from Gujarat whom the Modi government appointed chancellor of the Maulana Azad National Urdu University soon after assuming office.
The agreement in Jeddah was signed by Exim Bank regional head Tarun Sharma and ICD CEO Khaled Al Aboodi in the presence of Ahmad Javed, India's ambassador to Saudi Arabia.
To be based in Ahmedabad, the bank will offer interest-free capital to business startups, including small and medium enterprises within India, marking the entry of the Islamic banking – also known as participatory banking – into the country.
According to an Exim Bank statement, the IDB's bigger role will be in the $100 million (about Rs 670 crore) credit line it has pledged “with the aim of facilitating the export of goods and services from India to ICD's member countries”.
“The ICD will be open for business to all Indians, regardless of religious background. In Malaysia, the KFC chain runs on ICD finance although it is owned by a Chinese firm. Some people have this unnecessary issue with Islamic banking, which is actually known as participatory banking across the globe now,” said Sareshwala, who has been named as a director for the bank's India operations.
The IDB has also promised $55m (about Rs 380 crore) for a state-of-the-art rural mobile medical network – the first leg of which will be launched in Gujarat.
The IDB, which complies with global Islamic finance norms, does not charge interest on loans because the religion prohibits it. Instead, it charges a part of the profit and also shares any losses with the borrower.
According to the EY's World Islamic Banking Competitiveness Report 2016, Global Islamic banking assets would have reached US$1 trillion by 2015-end.
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Comments
Poorna Prakash, Mangalore
We have since long following banks
Catholic Syrian Bank
Nakodar Hindu Bank
The Hindu Co-Operative Bank Ltd.
But, you have a problem as soon as we get a Islamic bank.
This is nothing else but, intolerance.
Don't forget another bank: The Hindu Vote Bank.
Why feku's state is getting all of those facilities? why don't they bring it to Karnataka....
All the investment only to gujarat? Why? This investment will be mis used by Gujju's as it says if the business in loss it will be shared by both. gujju's are well known how to make them fool. This will create more mallya;s in Gujarat.
Hope one day rss will understand islam well and will follow the rule of Allah
Siddarth mumbai openly backing his hawala racket crooks operating by his modi govt
It is done to curb India's black money outflow and inflow by hawala means ..since 90% of hawala transactions are mostly encouraged by just particular section ...anyways since they have given 100 million credit line ..so we have ample opportunity to export pig related products to 56 Islamic countries ..hahaha ...nia monitoring is must as terrorists are most likely to use this bank ...
Appreciate Modi's wisdom in realising the importance of Islamic banking
Good initiative by P.M , i appreciate his move. Both india and KSA will be benifited by this.
Al Hamdlillah... itrs great news... waiting from a long time... hope it soon opens its branches all over India.
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