THIRUVANANTHAPURAM: Reserve Bank of India (RBI) Governor D. Subbarao has said the current banking regulations in the country do not allow the setting up of a bank in consonance with the Shariat.
He stated this at a brief interface he had with the media here on Thursday after a central board meeting of the bank, which reviewed key economic, monetary and financial developments in the country and outside.
Confining his address mainly to the Kerala-specific issues he had discussed with the Chief Minister and the Finance Minister the previous day, Dr. Subbarao said Kerala wanted a further improvement in the flow of bank credit to small and medium enterprises. A special meeting of the State Level Bankers Committee would be called in Thiruvananthapuram to discuss what should be done to achieve this. The Chief Minister had agreed to chair that meeting, he said.
Referring to the concept of a bank under the Shariat principles (which, among other things, meant the disbursement of no-interest loans), he said the interest of the depositors had to be protected under the current banking regulations. The setting up of a bank on these principles would require the support of new legislation