Islamic Banking: HC asks J&K admin to petition
Srinagar: The High Court on Thursday granted last opportunity to the J&K administration to file counter affidavit in a Public Interest Litigation (PIL) seeking introduction of Islamic Banking in the union territory.
The Chief Justice Pankaj Mithal and Justice Sanjay Dhar directed the counsel for the respondent agencies of the administration “to file counter-affidavit within a period of one month and no more” and posted the matter on 3rd November.
The court expressed its dismay over the fact that despite time allowed on 26th March this year the concerned respondents had failed to file the rejoinder.
The Assistant Solicitor General of India in the meantime submitted before the bench that the counter-affidavit of Reserve Bank of India would suffice the purpose on behalf of the Ministry of Finance, Government of India on the issue.
Jammu and Kashmir People’s Forum, a non-government organization, had filed the PIL on the matter three years ago. 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.
It also seeks direction to J&K Bank to place before the court the entire details of Non Performing Accounts (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 petition sought judicial intervention with direction to Union of India and RBI prescribing appropriate notification to permit opening of Shariah Banking Window by J&K Bank in all its branches, financial services and other units within and outside Jammu and Kashmir.
The petitioners said that non-interest banking system prescribed under Islamic law is in vogue successfully not only in many Muslim countries but also in several secular, developed and industrialized nations of the world.
The petitioner substantiated his plea by a number of research papers by national and international financial institutions, economy and business experts, who infer that Islamic banking leads to financial inclusion, stability and growth of the economies.
He said the people of J&K have no option but to go to the J&K Bank for advancement of loan at required times and in return they have either to repay the principal and interest amount with utmost displeasure as charging of interest is prohibited in Islam.
Had there been interest-free banking window or system in place, it would have been easier for the people to become the beneficiaries of broad-based financial inclusion within the meaning of Article 39 of the Constitution of India, he said.
The petitioner submitted that non-interest banking system existing elsewhere in the world has not only yielded better and positive results but has also been duly acknowledged by world bodies like International Monetary Fund (IMF), World Bank and other credible agencies.
He cited a World Bank report by Muliani Indrawati, its Managing Director, who said the Bank Group has “formally recognized Islamic finance and has designated it a priority area in their financial sector program”.
The World Bank has always closely cooperated with the Islamic financial services sector. This demonstrates our commitment to help strengthen the institutional development of the industry, said the petition.
It also cited an IMF report saying “it is easy to see the appeal of Islamic finance as it has the potential to contribute to higher and more inclusive economic growth by increasing access of banking services to underserved populations.”