A Perspective on the Existence and Development of Islamic Banking in India

Abstract

Opportunities abound in Islamic banking, which is rapidly becoming the industry’s dominant growth sector. Transparency, cooperative ventures, risk sharing, and ethical investment are at the heart of Islamic finance, which has attracted a diverse group of investors from both Muslim and non-Muslim backgrounds. Islamic banking is now a rapidly expanding sector of the global financial system and capital markets. Most of the globe now has access to Islamic banking. India has the world’s third-largest Muslim population, making it a promising market for Islamic banking. Shariah law, which underpins Islamic banking, according to forbids the charging or receiving of interest; investing in haram, or illicit businesses, is likewise forbidden under Islam’s legal code. Instead of the risk-transfer observed in traditional banking, Islamic banking is based on risk-sharing—an element of trade. This article makes an effort to define Islamic banking and describe its fundamental tenets and products enunciated. This study goes farther by analyzing the SWOT of Islamic banking in India, listing its benefits, and outlining its drawbacks.