The Reserve Bank of India (RBI) is in correspondence with the government to look into ways to bring in new rules to accommodate the concept of Islamic banking, said Governor D Subbarao. Speaking at the Jawaharlal Institute of Postgraduate Medical Education & Research, he said: “The current Banking Regulation Act does not allow the model of Islamic banking.
Under the current Act, banks are required to borrow and deposit (and paying interest) with RBI, and to give interest to depositors.”……………………………………….Full Article: Source