 Omar Abubacker(MENAFN - Arab News) The global banking and finance sector needs major structural changes in order to play a leading role in poverty alleviation and to encourage popular participation in nation building efforts, said Omar Abubacker, president of the Indian Forum for Interest-Free Banking (IFIB) in Jeddah.
Speaking to Arab News, Abubacker called upon the Indian government to make necessary amendments in the banking law in order to introduce interest-free banking, which he said could lead a massive cash flow into the national economy and bring about greater development in the country.
He disclosed IFIB's plan to organize a major seminar on interest-free banking at Holiday Inn in Jeddah on Feb. 27 in order to mobilize popular support for the system. He said a memorandum, demanding interest-free banking services in India, would be passed at the seminar and presented to Prime Minister Manmohan Singh during his coming visit to Riyadh.
Prominent speakers at the seminar include Umer Chapra, a winner of King Faisal International Award and an authority on Islamic banking, R. Seetharam, CEO of Doha Bank and a supporter of Islamic finance, and Mohammed Obaidullah, a senior economist.
"We have invited Mazen Batterjee, deputy chairman of the Jeddah Chamber of Commerce and Industry, to open the seminar." The seminar will be attended by members of the Indian expatriate community in Jeddah.
Speaking about the importance and impact of interest-free banking in India, Abubacker said: "It will not only strengthen the condition of the poor but also that of the nation, by increasing production and exports."
He highlighted the benefits to be received by the people of India through interest-free banking. "Companies and factories will be able to market their products at cheaper rates and this will increase the people's purchasing power."
The interest-free finance system, Abubacker said, will reduce the production cost as producers would be getting necessary finance without paying interest. It would also reduce prices of products, thus increasing sales.
"In my view the Islamic finance system should undergo a re-engineering process and introduce a new sharing method for the benefit of the entire labor force, allowing to receive a share of the company's profit. This will encourage employees to work hard and increase their productivity."
Abubacker called upon leaders of Islamic finance to introduce a monitoring regime to control prices and inflation. "If we sell at lower prices, our products will be highly competitive in international markets. This will increase the country's export volume," he said.
The IFIB chief said the introduction of interest-free banking in India would encourage a large number of people, especially religious Muslims to deposit in banks, directing a huge amount of money into the economy. A large number of Muslims keep their money in safes at home as they do not want to deal with interest-based banks because of religious prohibitions.
He said interest-free banking and the finance system would stabilize the economy by rejecting speculative trading. "It can protect investment rights, ownership rights, labor rights and social rights through the principle of sharing and this will ensure the progress and prosperity of all citizens from top to bottom," he said.
By P.K. Abdul Ghafour
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