Islamic Bank in India
The first Islamic bank in India will be situated in Kerala. The first Islamic bank in Cochin, Kerala will start functioning in 2010. The Islamic bank is helpful for the non-residents of India (NRIs) and who shortly return to India after loosing or resigning job or business abroad. Islamic banking is a profit or loss oriented bank. The Islamic bank’s back bone is its profit. We see many poor agriculturists and business people committing suicide while financial crisis in India. They do so because of the great interest on the loans sanctioned by the nationalized and private financing companies of India. Here is the solution to the problem of interest. The Islamic bank is an interest free bank. The interest free Islamic bank is a corporation to enable the poor and rich to live a better life with options to education and business.
Islamic bank offers options for higher studies and business. In this world of fight and tight competitions to win over others we all need money, luxurious cars, home, etc. Though we have a good paid job we may not be able to pay the interest charged by the other banks for the personal, car or home loans we take up. So, here comes the Islamic bank as a friend to help you out with free interest financing. We are repeating it again that its not less interest banking, rather an interest free Islamic banking. The Islamic bank for example buys your dream home and gives you it on rent basis for a period of time and later it will be registered into your name after a fixed period. Thus, the Islamic bank allows you to sleep happily in your home.
At the beginning the Islamic bank will be registered as a non-banking finance company and later will be altered into a full-fledged Shari’ah-compliant bank. The Islamic bank should not be treated as a bank as they do not charge any rate of interest from the customers. The Institute of Islamic Banking and Finance in India gets established under Public Societies Registration Act 1995 to ensure education on Islamic Economics, Banking and Finance. The Institute of Islamic Banking is not affiliated to any of the universities and it is an autonomous institute having its own syllabus to study. The Islamic banking institute is a non-profit, equal opportunity, professional educational research and training institution.
Being an interest free bank the Islamic bank does not come under the category of bank, but is under the category of financial institute. It also cannot issue cheque to its customers. The first Islamic bank of India will be in Cochin. The first Islamic bank in Cochin will be on its runway in 2010. The Islamic banking avoids the idea of interest rates of banking and believes on profit-sharing principles.
The Islamic banks have three kinds of deposit accounts as current, savings and investment accounts. The current and saving accounts of the Islamic bank are similar to that of the other bank as they will be safe and secure. But the investment account is not very much secure as it depends on the profit or The investment deposits in Islamic bank Cochin are treated for either a fixed or unlimited period of time. The customer will have to agree in advance to share the profit or loss in a particular proportion with the bank. The investment of the customer this way is not guaranteed. In fact you have to take greater risk as it might give you more profit.
The Islamic bank loans are different as you don’t have to pay interest and have to pay only the service charges. Thus, the Islamic bank loan profits the poor farmers, business men, pioneers and all the needy.
All the other banking services including money transfers, bill collections, trade in foreign currencies at spot rate etc. are also possible with Islamic banks. Thus, the Islamic banking in Cochin, Kerala will be gift to the pioneers of Kerala and India.