After years of effort the struggle for having a full-fledged Islamic banking system in India met with a moderate measure of success when the State Bank of India announced last week that it would launch a Shariah-compliant mutual fund in December.

It is for the first time that a state-owned bank is to start an Islamic financial instrument in India. The SBI has got both the Reserve Bank of India’s and the government’s permission for it. Happily, Muslim leaders have already welcomed it.

Although Shariah-compliant investments are already doing well in India, SBI’s move is the first such step coming from a state-owned bank. In 2013, the Bombay Stock Exchange launched its first Shariah Index, but IOS had launched possibly the first Shariah-compliant Index in 2008 in collaboration with financial consultants Eastwind.

This is not enough for proper Islamic banking in India, but an inclusionary move for non-interest financial operations. Islam does not approve of interest taking or paying. Scholars associated with IOS have written hundreds of well-researched articles and dozens of books arguing for interest-free banking and financial operations.

The IOS, in collaboration with Indo-Arab Economic Cooperation Forum, organised a two-day conference at Vigyan Bhavan, New Delhi, where leading bankers and fund managers from other countries came together. Besides, Indian and foreign government leaders interacted. Then Prime Minister of India, Mr. Manmohan Singh, visited to chat with the guests.

At the two-day international conference on “Indo-Arab Relations: Partnership in Development” these issues were part of the agenda. The then Finance Minister of India, P. Chidambram, and senior government officials participated in the proceedings.

At the IOS-organised two-day international conference on “Participatory Banking for All: A Business Proposition” stalwarts like Vice-President Hamid Ansari; then Deputy Chairman Rajya Sabha K. Rahman Khan; former Chief Justice of India AM Ahmadi; former Malaysian Deputy Prime Minister Anwar Ibrahim; MBN Rao, Chairman Indian Banks Association, and other dignitaries and bankers from India and abroad participated. The conference was inaugurated by the Union Finance Minsiter P. Chidambram.

Similar conferences were organised over the years in New Delhi on June 14, 2008 (“Move Towards Ethical Investment in India”) jointly by IOS and Indo-Arab Economic Cooperation Forum; in New Delhi again, on February 3-4, 2010 (“Beyond the Meltdown: Search for Options”) jointly by IOS and Indo-Arab Economic Cooperation Forum, and in Kashmir University, Srinagar (“Interest-Free Institutional Mechanism [Banking, Finance and Insurace] for Promoting Investment”) organised jointly by IOS and Department of Business and Finance Studies, Kashmir University from June 3 to 5, 2011.

The goal has not been achieved fully, but only in part. There is more struggle ahead.

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