Submission for Avishkar 2015-16, an inter-university research convention. Category - Commerce, Law and Management Level - Undergraduate Won First position at the district level and competed at the University Level. Link to Abstract: http://www.slideshare.net/shreyaskamath5/abstract-islamic-banking-feasibility-and-awareness-in-india Objectives: o developing a better understanding of Islamic Banking o analysing its feasibility in India o gauging the awareness of people regarding Islamic Banks o drawing attention to the sections of The Banking Regulation Act – 1949 that do not support Islamic Banking.

1. FEASIBILITY AND AWARENESS IN INDIA

2. HOW IS IT DIFFERENT?
PROHIBITION OF INTEREST
PROFIT-SHARING BASIS
INTEREST = EXPLOITATION

3. OBJECTIVES OF THE RESEARCH
ANALYSING
FEASIBILITY
GAUGING
AWARENESS
UNDERSTANDING
ISLAMIC BANKING
ONLINE
RESEARCH
CONDUCTING
SURVEYS
SWOT
ANALYSIS
CASE
STUDY
EXPERT’S
OPINION

4. S.W.O.T. ANALYSIS
STRENGTHS
• Uplifts marginalized segments of society
• No risky investments/speculations
• Inherent business ethics
All strengths make the bank - SOCIAL ORIENTED

5. WEAKNESSES
• Returns depend on profit
• Not supported by the banking framework
• Demands a pool of highly trained professionals
Weaknesses are OPERATIONAL and REGULATORY
S.W.O.T. ANALYSIS

6. OPPORTUNITIES
• Attracting capital from the Gulf countries
• Large market potential
• Globally market valuation over $1.8 Trillion (2013)*
• 12th Five Year Plan Focuses on ‘Inclusive Growth’
Opportunities are TOO BIG TO MISS
S.W.O.T. ANALYSIS
*IMF Working Paper - Islamic Finance, Consumer Protection and Financial Stability
https://www.imf.org/external/pubs/ft/wp/2015/wp15107.pdf

7. • Misinterpretation of the term “Islamic”
• Surplus may be diverted to unregulated areas
• Goes against the secular fabric of our country
Threat of NON-INCLUSION is greater
S.W.O.T. ANALYSIS
THREATS

8. EXPERT’S OPINION
ASHRAF MOHAMEDY
20+ Years in Islamic Finance
Managing Director and Founder,
Idafa Investments Pvt. Ltd.
 Total Assets Managed : Rs.75 Crore
 1,600+ Customers

9. • INTERMEDIATY BETWEEN BUSINESSES AND INVESTORS
• STRUCTURES SHARI'AH COMPLIANT DEALS
CASE STUDY : ISLAMIC BANKS AND INVESTMENTS
OBJECTIVE: ANALYSING THE INVESTMENT FUNCTION OF ISLAMIC BANKS

10. 103
39 38
25 15
59
Retail Services Trading Manufacturing Workshop Other
57
85
40 36
19 16 18 10
< 2 lac 2-5 lac 5-10 lac 10-25 lac 25-50 lac 50 lac -1 cr 1-5 cr > 5 cr
DISTRIBUTION BY INVESTMENT AMOUNT
DISTRIBUTION BY SECTORS
INFERENCE: Can serve investors and businesses of a WIDE RANGE
INFERENCE: MAJOR SECTORS are SHARI’AH COMPLIANT and can be served

11. INFERENCES:
• Islamic Finance is NOT CHARITY
• PROFESSIONAL APPROACH with SOCIAL
OBJECTIVES
INVESTMENT IN BUSINESSES CAN BE REJECTED FOR SEVERAL REASONS
18%
20%
12%18%
8%
12%
12%
Weak promoter background
High business uncertainty
Not Shari'ah Compliant
Low promoter response
Difficulty in monitoring
Investment not feasible
Business model is not feasible

12. OBJECTIVES OF THE RESEARCH
ANALYSING
FEASIBILITY
GAUGING
AWARENESS
UNDERSTANDING
ISLAMIC BANKING
ONLINE
RESEARCH
CONDUCTING
SURVEYS
SWOT
ANALYSIS
CASE STUDY
“REHBAR”
EXPERT’S
OPINION

13. SURVEY RESULTS
• Very low awareness among people – 71% had never
heard of Islamic Banking before
• Misunderstanding the term “Islamic” – 51% assume its
only caters to Muslims
• 36% know that there are no Islamic Banks in India
AWARENESS SURVEY
ACUTE LACK OF AWARENESS
100 RESPONDENTS
ALL RELIGIONS

14. • 13% of respondents did not have a savings account
• 62.50% DONATE THE INTEREST to charity
• 98.50% feel that Islamic Banks are ESSENTIAL for
Financial Inclusion
BANKING TRENDS IN THE MUSLIM COMMUNITY
EXCLUSION ≠ SOLUTION
SURVEY RESULTS 200 RESPONDENTS
ONLY MUSLIMS

15. OBJECTIVES OF THE RESEARCH
ANALYSING
FEASIBILITY
GAUGING
AWARENESS
UNDERSTANDING
ISLAMIC BANKING
ONLINE
RESEARCH
CONDUCTING
SURVEYS
SWOT
ANALYSIS
CASE STUDY
“REHBAR”
EXPERT’S
OPINION

16. CONCLUSION

17. THANK YOU FOR YOUR TIME...
Islamic Banking In India - Growth And Potential
www.indianresearchjournals.com
Islamic Banking In India – Future Potential
CRISIL – Young Thought Leader 2008 Pawandeep
An Overview of Islamic Finance
An IMF working Paper
Dr. Shahul Hameed bin Mohamed Ibrahim - PhD
Dissertation
http://www.iium.edu.my/iaw/phdcontents.html
Perceptions of Muslim Accounting Academicians
http://www.iium.edu.my
Islamic Accounting: Challenges, Opportunities and
Terror
http://www.accountingweb.com/aa/auditing/islamic
-accounting-challenges-opportunities-and-terror
AAOIFI
http://www.aaoifi.com/
Islamic Accounting Systems and Practices
http://www.academia.edu/7624898/Islamic_Accoun
ting_Systems_and_Practices.com
RESOURCES