The Reserve Bank of India (RBI) has sought the government approval to allow Turkey’s Bank Asya to offer Shariah-compliant lending in the country. Shariah, or the Islamic law, bans interest on financing. Bank Asya is keen to start its Indian operations through a representative office in Mumbai. Finance ministry considering the application of Bank Asya to open a representative office in Mumbai.
RBI has also requested the government to consider the Turkish bank’s application within 45 days. Last year during a visit to Indonesia, Prime Minister Manmohan Singh had said that he would ask RBI to look into the demand for establishing Islamic banking in India.
Launched in 1996, Bank Asya aims to develop interest-free banking products, according to its charter. It has 179 branches in Turkey. Bank Asya, initial capital of which is 2 million TL and current paid up capital is 900 million TL, has a multi-partnered structure based on domestic capital consisting of 244 shareholders except for the publicly held part as of the end of 2008.
Bank Asya accepts supporting production by complying with the requirements of interest-free banking as the foundation principle, is to spread interest-free finance system to larger masses by using the latest opportunities of technology in accordance with customer-oriented service mentality.
In this direction Bank Asya carries out its activities with 179 branches, 2 national and 1000 foreign correspondent banks besides the head office units as of December 2010.
Besides traditional distribution channels, namely branches, Bank Asya aims at offering uninterrupted, rapid and effective service via Online Banking, Alo Asya Telephone Banking, ATM and POS stations.
The current statutory and regulatory framework in India does not allow banks to undertake Islamic banking activities. But the Committee on Financial Sector Reforms, constituted by the Planning Commission, had in a report in 2008 recommended delivery of interest-free finance on a larger scale, including through the banking system.
