Differences between the Reserve Bank of India and government are out in the open with RBI governor D Subbarao on Tuesday spelling out Islamic banking where it doesn’t see eye to eye with the finance ministry.
The central bank had received a proposal to consider whether it was possible to permit Islamic banking in India. “Current banking regulation require interest rates. RBI charges interest on the funds it provides banks under repo and it also pays interest. Also, we do not permit risk financing while Sharia finance takes a position on this. There is the issue of dual regulation by Sharia board and RBI. We have said that should the government want this, they should have a new law” said RBI……………………………………….Full Article: Source