The Reserve Bank of India (RBI) on Sunday said that it has decided not to pursue a proposal for introduction of Islamic banking in the country, PTI reported on Sunday.
Islamic or Sharia banking is a financial system based on the principles of not charging or offering interest.
In a reply to an RTI query, the country's central bank said, "Taking into account the wider and equal opportunities available to all citizens to access banking and financial services, it has been decided not to pursue the proposal to introduce Islamic banking further."
The apex bank said that the issue of introduction of Islamic banking in India was examined by both RBI and the Government of India.
Earlier in 2008, a committee on financial sector reforms, headed by the then RBI governor Raghuram Rajan, had stressed on the need for a closer look at the issue of interest-free banking in the country, the agency reported.
"Certain faiths prohibit the use of financial instruments that pay interest. The non-availability of interest-free banking products results in some Indians, including those in the economically disadvantaged strata of society, not being able to access banking products and services due to reasons of faith," the committee then said.
As per the central government instruction, an inter-departmental group (IDG) was set up in the RBI to examine the legal, technical and regulatory issues for introducing interest-free banking in India.
Following that the RBI in February 2016 submitted the report to the finance ministry and recommended an "Islamic window" in conventional banks for a gradual introduction of Sharia-compliant banking.
