1B1 Bank Classification PCB11
1B1 Bank Classification PCB11
1B1 Bank Classification PCB11
1913 Commercial banks were required to register under the Companies Act, but monitoring
was lax. No CRR, SLR, BASEL Norms. (उन पर पहले नियम सख्त नहीं थे)
1926 Royal Commission on Indian Currency Hilton Young Commission) recommends setting
up a central bank named 'Reserve Bank of India'. ( एक ब्रिटिश आयोग ने सिफारिश की निगरानी के लिए रिज़र्व
बैंक बने)
1929 Great Depression in USA leads to collapse of 450+ banks in India. So British Indian Govt
becomes serious about setting up RBI. अमेरिकी महामंदी के बाद कें द्रीय बैंक की स्थापना की आवश्यकता महसूस हुई
1934 Reserve Bank of India Act was enacted. (इसकी स्थापना के लिए कानून बनाया गया)
1935, RBI becomes operational from 1st April, with 1st Governor Sir RBI Gov: Osborne Smith.
April India’s Viceroy: Willingdon. Government ownership was ~4.4% only.
1935, Commercial Banks fulfilling certain conditions were listed in the 2 nd Schedule of RBI Act,
July & such “Scheduled Banks” were required to keep CRR with RBI.
1943- C.D. Deshmukh 2nd FM of India becomes the first INDIAN Governor of RBI. He had also
1) Controller of Money Supply: Issues M0 under RBI Act, Makes Monetary Policy. ( 📑more in
Pillar#1A2) (मुद्रा आपूर्ति नियंत्रक)
2) 📑
Controller of Foreign Exchange: through FEMA Act. (विदेशी मुद्रा का नियं त्रक, more in Pillar#3)
3) Banker to Union & State Governments & Public Debt Manager (सार्वजनिक ऋण प्रबं धक).
4) Banker’s Bank: Lender of Last resort, Advises in monetary matters.
5) Regulator of all “BANKS”: through BR Act’49, Payment Systems’07 (नियामक)
6) Regulator of AIFI, NBFC-D (Deposit Taking NBFC) & others.
7) Promotional Roles (सं वर्धक भूमिका):
a. Customer protection through Ombudsman (शिकायत निवारण अधिकारी),
b. Financial Inclusion through PSL norms. Requires bank to open 25% of branches in rural
areas
8) Data Publication & awareness e.g. Annual Financial Stability Report (वार्षिक वित्तीय स्थिरता रिपोर्ट)
9) International Cooperation e.g. BASEL, IMF, G20’s Financial Stability Board etc.
a. E.g. 2021: RBI became member of “Network For Greening The Financial System
(NGFS)”. NGFS is a group of central banks to contribute to the development of
environment. HQ: Paris, Foundation Year: 2017 (वित्तीय प्रणाली की हरियाली के लिए नेटवर्क - ताकि
अक्षय ऊर्जा, पर्यावरण आदि को मदद मिले)
🙋🏼♀️FAQ: How can a bank collect the tax? isn’t it the work of the income tax officers? Ans. Yes, it is
the function of income tax officer. But, Tax money is to be transferred from tax payers’ bank account
to govt’s account. Agency banks deal with that aspect of money collection/storage/transfer work.
🐯🦋
13.13.3 : Daksh Web Portal for supervision (2022)
- Web system wherein Banks, NBFC send their reports to RBI
- Then RBI can monitor them more effectively. E.g. how many credit card frauds this month, new
guidelines to prevent it etc.
🐯🦋
13.13.4 : E-Kuber Portal
- Core banking solution (CBS) portal of RBI.
- All bankers have current accounts here.
- RBI handles NEFT/RTGS, Repo, OMO & other instruments from here.
- Retail Investors can buy G-Secs from here.
🔠❓ MCQ. RBI acts as a bankers’ bank. What does it mean? (UPSC-Pre-2012)
1) Other banks retain their deposits with the RBI.
2) The RBI lends funds to the commercial banks in times of need.
3) The RBI advises the commercial banks on monetary matters.
Answer codes: (a) 2 & 3 only (b) 1 and 2 only (c) 1 and 3 only (d) 1, 2 and 3
🔠❓ MCQ. RBI regulates the commercial banks in matters of (Asked in UPSC-Pre-2013)
1) Liquidity of assets 2) Branch expansion 3) Merger of banks 4) Winding-up of banks
Answer Codes: (a) 1 & 4 only (b) 2, 3 & 4 only (c) 1, 2 & 3 only (d) 1, 2, 3 & 4
🔠❓ MCQ. In India, the central bank’s function as the ‘lender of last resort’ means what? (कें द्रीय बैंक
को अंतिम उपाय का ऋणदाता कहा जाता है इस शब्द का मतलब क्या है) (Prelims-2021)
1. Lending to trade and industry bodies when they fail to borrow from other sources. [व्यापार औद्योगिक
सं स्थाओं को जब कहीं और से कर्ज नहीं मिले तो कें द्रीय बैंक कर्ज देता है]
2. Providing liquidity to the banks having a temporary crisis.[अस्थाई सं कट के दौरान बैंकों को तरलता देता है]
3. Lending to governments to finance budgetary deficits [बजट घाटा पूरा करने के लिए सरकार को कर्जा देता है]
Codes: a) 1 and 2 b) 2 Only c) 2 and 3 d) 3 Only
- Airtel Payments Bank and Paytm Payment Bank categorised as a scheduled bank in 2021-22.
🚩👶🏻FAQ: “After getting scheduled status, Can Payment Banks give loans/credit cards or accept
Fixed Deposits?” Ans. No, they’re prohibited from such activities. Paytm doing such activities as “an
Agent” of a federal bank, IndusIndia bank etc but Paytm cannot do it as ‘its own Banking business’.
NEXUS between Banks and Industrialists: From 1950s to 60- only 188 elite people controlled
the economy by being in board of top 20 banks, 1452 companies.
This led to reckless lending to directors and their firms. So, Banks failed frequently, RBI had to
close them. (रसूखदार लोग के कब्जे में थी बैंकिं ग व्यवस्था. भाई भतीजावाद में अंधाधुन कर्ज देते थे)
Private Banks unwilling to open in rural areas- this did not help in financial inclusion of poor,
farmers, MSME or achievement of Five Year Plan (FYP) targets or reducing regional imbalance.
(वित्तीय समोवेशन, पंचवर्षीय योजनाओ के लक्ष्याक हासिल करने में निजी क्षेत्र के बैंक मदद नहीं करते थे. क्षेत्रीय असमनाताए बढ़ी)
Table 2: Nationalization & Merger of Banks after Independence
1948 RBI Transfer of Ownership Act.
1948 1948: Op. Polo, Hyd. → 1951:1st FYP, → 1953: Air India nationalized from Tata
1955 Imperial Bank nationalized and became SBI.
1955-56 LIC Act took over private life insurance cos.
57: 1st Communist Govt in Kerala
61: Operation Vijay for liberation of Goa, Daman and Diu.
1963 State Bank of Jaipur and Bikaner merged together.
1969 'Banking Companies (Acquisition and Transfer of Undertakings) Ordinance,
1969: 14 Private banks with ₹ 50 cr/> deposits were nationalized e.g. Bank of
Baroda, PNB, Dena, Canara etc. (बड़ी जमा-राशि वाले निजी बेंको का राष्ट्रीयकरण)
Catholic Syrian Bank (1920, Kerala), Ratnakar Bank, Dhanlaxmi Bank, etc., did
not have such large deposits, so they were not nationalized. So, they are called
“Old Private Banks”.
1972-73 GIC Act- took over private Non-Life (=General) insurance cos. Later GIC was re-
organized with 4 subsidiaries: National Insurance, New India Assurance, Oriental
Insurance and United India Insurance. More in Pillar#1D 📑
1980 6 banks with ₹ 200 cr/> deposits were nationalized e.g. Corporation Bank, Vijaya
Bank, Oriental bank of Commerce etc.
2019 Previously, State Government of J&K owned 60% shares in J&K bank → Article
370 removal → Union Government took-over this shareholding. 🎓✋Further 500
🔂
13.16.2 Consolidation of PSBs → B) Privatization (निजीकरण)
It involves Government selling 51% or larger shareholding to private parties. Then such Public Sector
Bank will convert into a private sector bank. For example, (i) Axis Bank (Earlier called UTI Bank)
and (ii) IDBI Bank.
13.17 🏦 👨⚖️C OMMERCIAL BANKS PVT. SECTOR BANKS (PVB) निजी-क्षेत्र के बैंक
While the nationalization of banks was done with the lofty objectives, but politicization in Public
Sector Banks (PSBs) created new set of problems:
- Govt administered loan interest rates for populism= Low profitability for PSBs. (मुनाफा कम)
- Political Interference= Low recovery difficult (राजनीतिक हस्तक्षेप के चलते दबं ग तत्वो से ऋण वसूली मुश्किल)
- Employees Unions hampering innovation or customer delight. (नवाचार, ग्राहक सुविधा कम)
- 1991: Balance of Payment crisis (BoP: भुगतान सं तुलन,More in Pill#3) finally forced Govt. to set up a
committee for Banking Sector Reforms under The former RBI Governor M.Narasimham. He
suggested:
o Govt should ↓ its shareholding in Public Sector Banks. (सरकार अपनी शेयर हिस्सेदारी कम करे)
o RBI should ↓ CRR and SLR (सीआरआर, एसएलआर मे कटोती करे)
o Govt should not dictate interest rates to Banks. Liberalize the branch expansion policy
(बेंकों को लोनदर, शाखा विस्तार नीति तय करने मे सरकार दखल न करे।)
o Allow entry of New Private Banks and New Foreign Banks. (विदेशी बैंक और निजी क्षेत्र के बैंकों को
अनुमति)
Table 5: Three rounds of bank licensing in India. Names not that IMP unless giving Banking-exams
Round-1 (1993-95) Round-2 (2001-04) Round 3 (2013-16)
1) ICICI 1) Kotak Mahindra Rajan invited applications,
2) HDFC 2) Yes Bank (Founder Rana Bimal Jalan Committee made
3) IndusInd Kapoor). Related Topic: selections:
4) DCB Yes bank scam/Crisis 📑 1. Bandhan (A Microfinance
5) #
UTI → later Axis bank Pillar#1B2: Bad loans & company based in
6) #IDBI → now owned by other Burning issues in W.Bengal)
LIC Bank/NBFC sector 2. IDFC (An infra finance
🚩👶🏻FAQ: In early 90s- UTI Bank & IDBI Bank were not private sector banks, then why have you
kept them here in table? Ans. Because presently, they’re private sector banks. I don’t have to submit
this handout as evidence in the Supreme Court so I don’t care being so pedantic about everything.
You need to change your approach towards studies, to finish syllabus faster. #RAFTAAR
13.17.1 🏦 👨 🚗📜 ⚖️ ‘On-Tap’ License to open Private Sector Banks (जब मन चाहे तब अर्जी डाल दो)
A private entity can open Bank only after getting license from RBI under Banking Regulation Act,
1949. Previously, one had to wait till RBI invited applications. But in the On-Tap system (from
2016), one can apply to RBI whenever he wishes (like a driving license), provided that he meets the
eligibility requirements e.g. min. 10 years’ XP in banking finance, minimum 500 crore capital etc.
🤠 Foreign - While CRR, SLR & other norms applicable, but PSL norms vary depending on
Bank in India 📑
number of branches. [ Ref: Prev. Handout: PSL]
- RBI gives them ‘on-tap’ license on reciprocal basis. i.e. if foreign nation allows
Indian banks to operate in their country, THEN RBI allows that nationa’s
banks to operate in India.
- 2023: Axis bought/tookover Citibank’s Indian branches.
🧔 Indian - Foreigners can invest max. 20% in its shareholding. E.g. BoB (15%), SBI
Public Sector (14%), PNB (13%) भारत की सार्वजनिक क्षेत्रों में विदेशी निवेश की सीमा
Bank
🤵 India - Foreigners can invest upto 49% (automatic-स्वचालित तरीके ) and upto 74% by
Private approval of Government (सरकार की अनुमति लेकर). (More in 📑Pillar#3A: FDI)
Sector Bank
- e.g. HDFC (73%), ICICI (59%) Axis Bank (52%) is owned by Foreigners.
- Although Govt thinking of ⏫ to 100% to help capital mobilization for
📑
BASEL-III norms . [ More in Next Pillar#1B2: NPA handout]
🚩👶🏻FAQ : M.Narasimham committee was made in 1990s so how can he be in 1970s? Ans. Same
#
gentleman was chairman of many committees ✅(1) Financial inclusion (1970s) ✅(2) banking
reforms-I (1990s) ✅(3) banking reforms-II (1990s).
13.20.3 🏦 👨⚖️🌎🚫Commercial Banks Differential Banks SFB & PB
Parameters Small Finance Banks लघु वित्त बैंक Payment banks भुगतान बैंक
Examples Capital Small Finance Bank (Punjab), 6 at present: Airtel, India Post, FINO,
Ujjivan (Karnataka), Utkarsh (UP): Paytm, Jio, NSDL. (Total 11 were
Total 10 list at selected; but AdityaBirla-Idea & other
rbi.org.in/scripts/banklinks.aspx withdrew later)
Eligibility Min.100cr. capital-walla Resident Min.100cr. capital-walla resident
during 1st Indian, Local Area Bank, NBFC, Indians, NBFCs, PPI-wallets (pre-paid
round of Micro-finance, with 10 years exp. in payment instrument), mobile telephone
licensing banking / finance companies, super-market chains,
cooperatives & companies controlled by
resident Indians
📌Area RBI Committee gave selection Anywhere
preference North East & Central
India clusters where Universal Banks’
penetration is poor
CRR, SLR, Same as Indian private banks Same as Indian Private Banks, but
Repo, FDI? special terms & condition in SLR.
Rural Must have 25% branches in unbanked No need but 25% access points must be
Penetration rural areas in rural areas like Kiraana Stores
🛒Target Unserved Underserved Farmers, Promoting Small savings
🚩👶🏻FAQ: if payment banks cannot give loans, then what do they do with deposit money? Ans. It is
answered within the above table itself. Read properly. If you’re going to glance over this handout
casually & carelessly like a WhatsApp message then handout cannot help you in the UPSC exam.
13.20.4 🏦 👨⚖️🌎🚫🚗📜 On-Tap Licenses for starting SFB (मन चाहे तब अर्जी डालो)
- RBI reviewed & found SFBs have achieved their priority sector targets and helped in financial
inclusion. More competition and new players will help. (अधिक बैंकों को अनुमति देने से स्पर्धा में बढ़ोतरी
वित्तीय समावेशन में मदद)
- so 2019, RBI announced it’ll allow ‘On-Tap’ license for SFB soon. (i.e. no need to wait for
notification unlike IAS exam, apply whenever you wish like a driving license)
13.20.5 🤒🚨 Payment Bank → Paytm Payments Bank - RBI takes action (2024)
• 2017: Paytm Payments Bank Ltd (PPBL) starts operation.
• Its parent company is called ‘One97’. Founder Vijay Shekhar Sharma.
• Early Investors: Warren Buffett’s Berkshire Hathaway Group (USA), Jack Ma’s Alibaba
Group (China) etc. Although most of them sold their shares at a loss & exited by 2023.
✋🚨 2024: RBI stopped Paytm bank from accepting deposits, adding money in PayTM wallet,
Fastag, etc., for the following reasons: 👇
Non-compliance with Know-Your-Customer (KYC) norms while opening bank accounts.
Same PAN number used for activating multiple accounts, and these accounts were conducting
crores of rupees of transactions. (एक ही पैन कार्ड नंबर द्वारा कई बैंक खातों को खोला गया था और वहां धन शोधन यानी
काले धन को सफे द करने का गैर कानूनी काम चल रहा था ऐसे आरोप.)
Allegations of Money laundering (converting black money into white)
RBI’s inspection revealed that there was no separation in servers or physical space occupied by
the Paytm bank and other One97 group entities e.g. Paytm Insurance, PayTM Mall, Paytm
Games, etc. = data security issue, possible spams/marketing offers by misusing the user data.
✅ However, RBI has allowed Paytm to continue its UPI/App related activities e.g. Paytm QR,
Paytm Card Machine; financial services, such as loan agent work, insurance agent work, and equity
(share) broking etc.
📬
13.20.6 Payment Banks → India Post Payment Bank (IPPB)
- Registered as a Public Limited Company under Companies Act, 100% owned by Department of
Posts (Ministry of Communication and Information Technology.) → Obtained RBI’s License
under Banking Regulation Act to start working as a Payment Bank.
- Airtel Payments Bank was first to launch operations in 2017. Later, IPPB launched in 2018.
🔠❓ MCQ. Find correct about India Post Payments Bank (IPPB)? [Asked in UPSC-CDS-2018-1]
1) It has been incorporated as a Public Limited Company.
2) It started its operation by establishing two pilot branches at Hyderabad and Varanasi.
Answer codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
13.20.9 💸📡 🏦
: Digital Payments- (Proposed) Digital Banks by NITI Aayog (2021)
2021: NITI Aayog proposed setting up 'full-stack digital banks’.
This will be new type of banks under the Banking Regulation Act, 1949 (BR Act).
Digital Banks will not have physical branches. They will rely on internet for delivering banking
services. 🤩Benefit? financial inclusion of rural area. (नीति आयोग ने ऐसा प्रस्तावित किया है कि नए क़िस्म के
13.20.11 💸📡 🏦
: Digital Payments- NeoBanks / full-stack digital banks
- Neo-banks/full-stack digital banks= are completely online-based digital banking platforms. They
don’t have physical branches.
- NITI Aayog proposed this to increase banking penetration in India. But RBI not keen to allow.
- RBI believes our existing banks are capable to deliver the banking services both online and thru
physical branches.
But this is “fancy term” (Neobank) comes in news every once in a while due to Startup-company ke
PR (public relations)/paid promo-articles in newspapers. . (निवेशकों को आकर्षित करने के लिए स्टार्टअप कम्पनीओ
द्वारा चिकने चुपड़े शब्दों वाले समाचार प्लांट किए जाते हैं. अपने को अभी से बहुत नींद खोने की ज़रूरत नहीं, क्योकि आरबीआई इसको
अनुमति देने की जल्दी में नहीं है।)
13.21.1 🏦 👨🌾😥 Cooperative Banks: Negative News (2019): PMC Bank (कांड हो गया)
Outdated for 2024-25. So removed from handout. Brief idea given in the video lecture.
🔠❓ MCQ. Recently the RBI has imposed limitations, initially for a period of six months, on the
withdrawal of amount by account holders of this banks: (UPSC-CDS-i-2020) (a) IndusInd Bank
🔠❓MCQ. Find correct Statements about ‘Urban Cooperative Banks’ in India (Pre-21)
1. They are supervised and regulated by local boards set up by the State Governments. [राज्य सरकार
उनकी निगरानी और नियंत्रण करता है]
2. They can issue equity shares and preference shares. [वे इक्विटी शेयर और वरीयता शेयर जारी कर सकते हैं।]
3. They were brought under the purview of Banking Regulation Act, 1949 through an Amendment
in 1966. [उन्हें 1966 में एक सं शोधन के माध्यम से बैंकिं ग विनियमन अधिनियम, 1949 के दायरे में लाया गया था।]
Codes: a) 1 only b) 2 and 3 only c) 1 and 3 only d) 1, 2 and 3’
Related topics: Refer to
DICGC, UCB’s Supervisory Action Framework Pillar##1B2: Bad loans & other burning issues in
(SAF), UCB 4 tier regulation→ refer to Banking Sector
Jan Dhan Yojana, Lead Bank Scheme etc → Pillar##1D: Financial Inclusion
13.22.1 🕵🏻☂️
NUCFDC ko Funding (वित्त पोषण /पैसा कहां से लाएगा)
• NUCFDC will receive funding from National Cooperative Development Corporation
(NCDC, a statutory body under Ministry of Cooperation)
• NUCFDC aims to collect ₹300 cr capital (from investors) → use this money for developing
IT-Technology for UCB.
are meant for Medium to long term loans to industries, including support services like arranging
foreign currency, underwriting, technical / management consultancy, Bank guarantee etc.
They don't accept DEPOSITs from ordinary people.
Previously the financial intermediaries (वित्तीय मध्यस्थ) were classified into three categories 1) Bank,
2) Non-Bank 3) DFI
13.23.3 🚫🏦👨⚖️Non Bank All India Financial Institutions (AIFI: अखिल भारतीय वित्तीय सं स्थान)
These are setup by respective acts of Parliament
EXIM (Jan 1982) NABARD (Jul 1982) NHB (1988) SIDBI (1990)
आयात निर्यात के लिए कृ षि और गाँव विकास के लिए गृह/आवास निर्माण छोटे उद्योगों के विकास के लिए
Export-Import National Bank for National Housing Small Industries
Bank of India Agriculture and Bank Development
Rural Development Bank of India
Boss: Government Previously RBI had Original boss: Originally 100% owned by
of India (100%) minority-stakes in RBI (100%). But, IDBI. Later on shareholding
NABARD but 2018: 2019: RBI sold transferred → SBI, LIC etc
100% Govt owned. 100% to Govt.
Promotes cross - Regulatory - Finance to - Operates Credit
border trade and supervision: banks and Guarantee fund, Small
investment, helps Coop + RRB NBFCs for Enterprises Development
importers-exports housing Fund (SEDF).
- + Indirect
with loans and projects.
refinance to - Operates udyamimitra.in
🚩👶🏻FAQ: Whether NABARD is 100% owned by govt or 100% owned by RBI- what difference does
it make? Ans. Shareholders select board of directors via Voting. Shareholders receive dividend from
the profit of the organization. So Govt or RBI gets benefits depending on who owns majority
shareholding.
🚩👶🏻FAQ: What is the difference between Owner and Regulator? Ans. Ans. Government owns SBI.
But Government doesn’t regulate SBI’s banking business. RBI regulates it using powers of Banking
regulation Act.
2021: NaBFID: National Bank for Financing Infrastructure and Development was setup by an
law/act of Parliament, with an initial capital of ₹20,000cr capital.
NaBFID will get funding from RBI, Govt, Financial institutions, World Bank etc. It’ll also issuing
bonds in market etc
NaBFID will give loans worth ₹5 lakh crore in 3 years. It’ll help in National Infrastructure
📑
Pipeline (NIP) project.( Ref: HDT-Pillar#5:Infrastructure)
Chairman: K.V. Kamath.
HQ: Mumbai (Presently it is working from the office of SIDBI in Mumbai)
Regulator? RBI will regulate NaBFID.
2022: RBI ordered that NaBFID will be treated as All India Financial Institution (AIFI).
Thus, NABFID is the fifth AIFI after EXIM Bank, NABARD, NHB and SIDBI.
(सरकार ने क़ानून द्वारा बुनियादी ढांचे और विकास के वित्तपोषण के लिए राष्ट्रीय बैंक बनाया था. और उसे रिज़र्व बैंक द्वारा अखिल भारतीय वित्तीय सं स्थान
(एआईएफआई) का दर्जा दिया गया है।)
13.26.4 🚫🏦👨⚖️Credit Information Companies (CIC) versus Credit Rating Agencies (CRA)
REITs / InvITs
- Pool & invest money in real estate / infra projects e.g. IRB. < More in 📑
Pillar#1C: SEBI Handout>
Underwriting, Merger & Acquisition, Wealth Management of rich
Investment Banks: people:
(USA term) & E.g. Kotak Mahindra, Citigroup, Bank of America, DSP Merrill Lynch,
Merchant Banking Morgan Stanley, SBI capital
Companies: 2021: SEBI allowed payments banks to act as investment bankers (after
(UK term) fulfilling the rules/regulations of SEBI). सेबी से अनुमति लेकर भुगतान बैंक ये कर
सकते हैं
Venture Capital VCF Help startup companies to arrange capital e.g. IFCI-VCF, IDG-VCF
Fund (VCF)
Market 3 sub-types (Ref: Pillar#1C for more)
Infrastructure - 1) Stock exchanges (BSE/NSE etc) - help buyer/seller connect in
Institutions (MII) secondary market
📔📔ES20 observed: Shadow banking is a set of activities and institutions. They operate partially
(or fully) outside the traditional commercial banking sector. They are not fully regulated by the
RBI. ये सं स्थाए पारंपरिक बैंकिं ग नियमो के दायरे से बाहर काम करती है.
They mobilize funds by borrowing from banks, issuing Commercial Papers (CP) and Bonds
(=Non-convertible debentures)
Table 12: Three important segments of the shadow banking system in India
HFCs Housing Finance Companies. E.g. Dewan Housing Finance Limited (DHFL)
LDMFs - Liquid Debt Mutual Funds invest clients money into short term debt instruments
such as T-bill (of Govt) and Commercial Papers (of companies).
- Interest (Riba) is prohibited (Haram) in Islam. So, Islamic Banking operates through Ijara,
Murbaha, Musharaka mechanisms- in which depositors’ money is invested in borrower’s
property / business and returns are shared in form of rent / profit but not in the form of Interest.
- Some committees said give permission to Islamic Banks in India, but RBI is opposed (2017).
- 2017: Kerala Govt allowed opening of a Islamic Bank by registering it as “co-operative society”,
so as to avoid the RBI’s ban. But further, legal controversy notimp. 🎓✋
- 👍Pro-Arguments? Financial inclusion of Minorities/Muslims. अल्पसं ख्यकों का वित्तीय समावेशन
👎Anti-Arguments against allowing Islamic Banking in India?
- Specialized Manpower required. Secular India’s PM-Jan-Dhan Yojana & Post Office Payment
bank efforts are sufficient. (भारत में बैंक-बचत की सेक्यूलर/धर्मनिरपेक्ष सेवाएं उपलब्ध. अलग से एक धर्म विशेष के लिए
वित्तीय सेवा देने की कोई ज़रूरत नहीं)
- USA Govt alleges their involvement in terror finance & money laundering. (अमरीकी सरकार का आरोप
है कि ये सं स्थाएँ आतंकीओ को पैसा पहुँचाना, और काले धन को वैध/सफ़े द बनाने जैसे ग़ैर-क़ानूनी काम करती है।)