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Islamic Economics and Finance

Islamic economic and financial system, is emerging as an alternative to the prevailing conventional system based on interest and exploitation. Islamic financial system is growth oriented, based on ethics and beneficial to all segments of the society and more particularly the marginalized and unorganized sector.

The 2006 Sachar Committee report, commissioned by the state to examine the social, economic and educational conditions of India's Muslim communities, recommended steps be taken to improve Muslims' access to credit, which it called inadequate. Muslims shun conventional banks because of Islam's ban on interest . Access to sharia-compliant credit and access to sharia-compliant investment options is the demand of the time.

The issue of investment options looks likely to resolve. Some capital market products, regulated by the Securities and Exchange Board of India (SEBI), are already based on Islamic equity indexes, such as one launched in 2010 by TASIS and the Bombay Stock Exchange; Islamic indexes exclude firms involved in areas forbidden by the religion, such as alcohol and gambling. SEBI introduced guidelines for alternative investment funds (AIF) which allow the pooling of capital from local and foreign investors.

While RBI is still to resolve critical banking law issues to allow Islamic banking but it is of the view that some Islamic financial services could be delivered through vehicles other than banks which is encouraging some firms to look at developing sharia-compliant products outside the banking sector.

These developments indicate to the emerging need for scholars trained in Islamic economic and financial system. The Centre would offer specialized diploma course in this field creating employment opportunities as well as a team of scholars who would help create awareness about the viability and benefits of this alternative system and will form the main link between financial institutions and their would be clients including foreign investors.