Why India is still dragging its feet on Islamic Banking

Why India is still dragging its feet on Islamic Banking


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Bank forecasts six-fold growth for Islamic banking in Sri Lanka

Bloomberg/Colombo   Amana Bank, Sri Lanka’s only full-fledged Islamic lender, plans to double its branches by expanding in rural areas, forecasting a six-fold growth in demand. The company, which started in August 2011, will add five outlets this year to its existing 14 and nine in 2013, Colombo-based chief executive officer Faizal Salieh said in an October 17 interview. Sri Lankan Islamic banking assets could reach $1.5bn from $250mn now, he added, without specifying a timeframe. Amana posted a net profit of 178mn Sri Lankan rupees ($1.4mn) in the nine months through September and had assets of SLR18bn, according to Salieh. Amana is targeting unbanked individuals and the small-to-medium sized enterprises that are driving the nation’s growth, Salieh said. The $59bn economy expanded 8.3% last year, the fastest pace since records began in 1959, as the government boosted spending on roads, ports and power plants following the end of a 26-year civil war in 2009. “Islamic finance is at an infant stage in Sri Lanka but it’s developing,” Suresh Perera, a tax and regulatory principal with KPMG Sri Lanka in Colombo, said in an interview recently. “There’s demand from the Muslim population involved in trade and business and there’s also interest from non-Muslims.” Of the country’s 21.5mn people, about 8% are Muslim, compared with a majority of 69% who are Buddhist, according to the CIA World Factbook. In neighboring India, which has no Islamic finance policies, Muslims account for 13% of the 1.2bn population, the world’s third largest. Five non-Islamic lenders are also offering Shariah-compliant services through booths, according to an e-mailed statement from the department of bank supervision at the central bank. Amana’s website shows it has branches concentrated across central Sri Lanka from the west to east coasts, including the capital Colombo and the cities of Kandy, Kattankudy and Mawanella. Hatton National Bank started its Shariah windows in February to tap the market as about 25% of all businesses in Sri Lanka are owned by Muslims, L A M Hisham, who heads the Islamic finance unit, said in an interview. “This is an alternative and lucrative way of banking,” Colombo-based Hisham said, adding that the bank’s network of 250 branches helps reach out to Muslim customers. “We are looking for more innovative products to offer.” There’s been no progress since the government announced in 2010 it would grant Shariah-compliant financial transactions the same tax treatment as non-Islamic products, Amana’s Salieh said. Hisham said KPMG is leading the lobby to solve those issues, but he doesn’t see them as a hurdle to growth. Demand for Islamic banking products may not be strong enough for Sri Lanka to develop a regulatory framework as the Muslim population is small, according to Singapore-based consulting company Five Pillars. “Their many war-torn years may still be a concern before foreign funds consider Islamic finance opportunities in Sri Lanka,” Raj Mohamad, managing director at Five Pillars, said by e-mail. “It still has some years to go before joining the queue to attract Islamic finance monies.” Drafting new rules would help pave the way for a sale of Shariah-compliant bonds, or sukuk, and provide the nation with an alternative source of financing. China, India and the Manila- based Asian Development Bank are the biggest donors for infrastructure projects in Sri Lanka. The International Monetary Fund has provided $2.6bn to help the nation rebuild foreign-currency reserves since the end of the civil war. “We have supported Islamic finance and will be very supportive,” Ajith Nivard Cabraal, governor of the Central Bank of Sri Lanka, said in an interview recently from Colombo. “Sukuk and other Shariah-compliant instruments would be a source of funding for projects and beneficial to Sri Lanka,” he said. Worldwide sales of sukuk, which pay returns on assets to comply with Islam’s ban on interest, almost doubled this year to a record $39.1bn from the same period last year, according to data compiled by Bloomberg. Average yields on the debt declined six basis points, or 0.06 percentage point, last week to an all-time low of 2.86%, the HSBC/Nasdaq Dubai US Dollar Sukuk Index shows. The difference between the average and the London interbank offered rate, or Libor, narrowed 14 basis points to 181 basis points. Shariah-compliant notes returned 8.5% in 2012, according to the HSBC/Nasdaq index, while debt in developing markets climbed 16.5%, JPMorgan’s EMBI Global Composite Index shows. Amana, whose shareholders include Bank Islam Malaysia and Jeddah-based Islamic Development Bank, plans to expand to overseas markets such as India, the Maldives and Mauritius once its domestic business strengthens, Salieh said. “What would drive the growth of Islamic banking in Sri Lanka is its ability to attract investment from outside such as Middle Eastern and Far Eastern funds,” he added. Islamic banking assets in Sri Lanka are small relative to those in neighboring Pakistan and Bangladesh, who have the world’s second- and fourth-largest Muslim populations. Holdings that comply with religious tenets in Pakistan total $6.8bn and $10bn in Bangladesh, according to central bank data. Indonesia, home to the world’s largest Muslim population, has assets of $16.8bn. Sri Lanka’s economy, which relies on exports of tea, spices and textiles, will probably slow to growth of 6.8% in 2012, as the weaker global outlook hurts demand for its goods, central bank governor Cabraal had said by telephone.  That’s still more than the 3.5% pace in 2009.  The Asian Development Bank on October 3 estimated the island’s economy will expand 6.5% this year and 7% in 2013.  “The main opportunity for Islamic finance in Sri Lanka is growth in the Muslim community,” Sanjeewa Fernando, an analyst at CT Smith Stockbrokers in Colombo, said by e-mail. “Well-organised marketing could be seen as a strategy to overcome challenges such as a lack of awareness.”

At lit fest, Karnad questions Naipaul’s lifetime achievement - Mumbai Mirror -Times of India | Girish Karnad lashes out at VS Naipaul - By Supriya Nair - LIVEMINT.COM

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At lit fest, Karnad questions Naipaul’s lifetime achievement

Playwright launches scathing and unexpected attack on, among other things, Sir Vidia’s stance on the Indian Muslim

Mumbai Mirror Bureau

Posted On Saturday, November 03, 2012 at 10:09:38 AM

A master class by Girish Karnad on his ‘life in theatre’ at a Mumbai lit festival on Friday took a dramatic turn when the playwright launched an unexpected and scathing attack on Nobel laureate V S Naipaul, who was awarded the festival’s Lifetime Achievement Award on October 31. The crowd of around 80, which included actor Naseeruddin Shah and writer Farrukh Dhondy, at the Experimental Theatre at NCPA, was stunned when Karnad accused Naipaul of mis-characterising Indian history, Islam, and the riots sparked in Mumbai after the Babri Masjid demolition. But after the initial awkwardness, the audience seemed to enjoy his well-worded assault. Festival director Anil Dharkar said that, although controversies were an acceptable part of a literary festival, he was taken aback by Karnad’s attack. “I told him it was unfair to say this about someone who wasn’t present, and who was bestowed a Lifetime Achievement award by us after considering his whole body of work. But when Girish criticised even the Nobel Prize that Naipaul received, I couldn’t argue much. I just felt when we gave him a platform to talk on a particular subject, to criticise Naipaul was out of place.” Dhondy said, “Karnad implied that Naipaul received the Nobel Prize because he is anti-Muslim. This sounds like a conspiracy theory from an American ghetto, as misplaced as saying George Bush brought down the Twin Towers. Naipaul’s wife is a Muslim and so are his children. Karnad was being unfair and he was voicing Chinese whispers without knowing the truth. Girish doesn’t know Naipaul. I do.” Excerpts from Karnad’s speech: “The award ceremony held on the 31st of October coyly failed to mention that Naipaul was not an Indian and has never claimed to be one. But at no point was the question raised, and the words Shashi Deshpande, the novelist, had used to describe the Neemrana Festival conducted by the ICCR in 2002 perfectly fitted the present event: ‘it was a celebration of a Nobel Laureate …whom India, hopefully, even sycophantically, considered an Indian.’ “Apart from his novels, only two of which take place in India and are abysmal, Naipaul has written three books on India and the books are brilliantly written - he is certainly among the great English writers of our generation. They have been hailed as a continued exploration of India’s journey into modernity, but what strikes one from the very first book, A Wounded Civilization, is their rabid antipathy to the Indian Muslim. The ‘wound’ in the title is the one inflicted on India by Babur’s invasion. Since then Naipaul has never missed a chance to weigh in against the ‘invaders’, accusing them of having savaged India for five centuries, of having brought, among other dreadful things, poverty into it and destroying the glorious ancient Hindu culture. “A point that strikes one immediately about these books is that there is not a single word in any of them on Indian music. And I believe that if you cannot respond to music, you cannot understand India. Music is the defining art form of the Indian identity. Naipaul’s silence on the subject when he is exploring the whole of modern Indian culture suggests to me that he is tone deaf - which in turn explains his insensitivity to the intricate interweaving of Hindu and Muslim creativities, through the Bhakti and Sufi movements, that gave us this extraordinary heritage, alive in the heart of every Indian home. “What Naipaul’s virulence against Indian Islam conceals, however, is that he has borrowed his model of the history of Indian culture from the British musicologists of the eighteenth and nineteenth centuries, like William Jones. “…They decided that this once pure - and - glorious music must have been, at some point during the course of its long history, corrupted and mauled - and they found the villain in the invading Muslim. So, according to them, once upon a time there was a pristine Indian musical culture, which the Muslims had disfigured. They therefore ignored the music that was being performed around them and went in search of the true Hindu music. In his analysis of Indian culture Naipaul simply borrows this line of argument and reemploys it - as his original perception. And not for the first time. “Naipaul accuses R.K. Narayan of being indifferent to the destruction and death symbolized by the ruins of Vijayanagar, which to him was a bastion of Hindu culture destroyed by the maurauding Muslims. But again he gets this interpretation of the history of Vijayanagar readymade from a book by Robert Sewell called A Forgotten Empire, published in 1900. Naipaul, as always in awe of his colonial sources, simply accepts this picture as the unadorned truth and recycles it wholesale as his own. “…Of the Taj, probably the most beloved of the monuments in India, Naipaul writes, ‘The Taj is so wasteful so decadent and in the end so cruel that it is painful to be there for very long. This is an extravagance that speaks of the blood of the people.’ He brushes off historian Romila Thapar’s argument that the Mughal era saw a rich efflorescence of the mixture of Hindu and Muslim styles, by attributing her judgment to her Marxist bias and says, ‘The correct truth is the way the invaders look at their actions, They were conquering. They were subjugating.’ To Naipaul, the Indian Muslim remains an invader for ever, forever condemned to be condemned, because some of them had invaders for their ancestors. It is a usage would yield some strange results if applied to the USA. “As for Naipaul’s journalistic exploration of modern India, mainly in the form of a series of interviews conducted with Indians right across the board, one must confess they are supremely well written and that he is a master in drawing sharp and precise visuals of the people he talks to and of the places he visits.” “…(but) How reliable are the conversations he records? In a well-known essay, Naipaul describes his visit to the National Institute of Design, Ahmedabad, where he stayed with his friend, Ashoke Chatterjee, the director of the Institute. In a recent email to me, Mr Chatterjee said, that Naipaul’s essay was ‘a scenario that could have been but was not what he actually saw. Fragments of reality selected and put together, into a collage of pure fantasy.’ Chatterjee’s friendship with Naipaul came to an abrupt end when Chatterjee told Naipaul that his book, A Wounded Civilization, should be classified as fiction. “In a recent book, Naipaul takes up for examination the autobiography of Munshi Rahman Khan, who emigrated to Suriname at the end of the nineteenth century, and contrasts it with Gandhi’s. Sanjay Subrahmanyam, the historian, has reviewed the essay in the London Review of Books and it doesn’t take him much effort to establish that Naipaul could only have read a third-hand, truncated translation of the text. ‘It is as if a reader in Gorakhpur was reading Naipaul in Maithili after the text had passed through a Japanese translation.’ That doesn’t prevent Naipaul from commenting even on the style and linguistic usage of Rahman Khan. “…One of the first things Naipaul did on receiving the Nobel Prize was to visit the office of the BJP in Delhi. He who had earlier declared that he was not political, ‘that to have a political view is to be programmed’, now declared that he was happy to be politically ‘appropriated’. It was then that he made his most infamous remark: ‘Ayodhya’, he said, ‘is a sort of passion. Any passion is creative. Passion leads to creativity.’ “…In cold blood, Naipaul was glamorizing these events as ‘passion’, as ‘a creative act’. “Salman Rushdie’s response was that Naipaul was behaving like ‘a fellow-traveller of Fascism and (that he) disgraces the Noble Prize.’ “…Landmark and Literature Alive who have announced this Award have a responsibility to explain to us where exactly they stand with regard to these Naipaul remarks. Naipaul is a foreigner and can make pronouncements as he wishes. But do they mean to valorize Naipaul’s stand that Indian Muslims are raiders and marauders? Are they supporting his continued insistence on Muslim buildings in India being monuments to rape and loot? Or are they by their silence suggesting that these views do not matter? The Award givers have much to answer for.” ----- www.livemint.com Article rank 3 Nov 2012 Mint BY SUPRIYA NAIR supriya.n@livemint.com Girish Karnad lashes out at VS Naipaul ZoomBookmarkSharePrintListenTranslate Playwright Girish Karnad, speaking at the Tata Literature Live! festival in Mumbai on Friday, took the audience aback with his unexpected criticism of V.S. Naipaul for his “rabid antipathy towards Indian Muslims”, and asked for an explanation from the festival’s organizers on why they had honoured the author with the festival’s Lifetime Achievement Award. Naipaul was awarded the honour at a function on Wednesday night at the National Centre for the Performing Arts (NCPA), the festival’s venue. Karnad’s remarks came as a surprise at his session, which was scheduled to be a 1hour masterclass of sorts, on his life in theatre. Extemporizing from his notes, Karnad spent 40 minutes of his hour-long speech putting a bend in the river of gushing Naipaul tributes. “Apart from his novels, only two of which take place in India and are abysmal, Naipaul has written three books on India. The books are brilliantly written,” Karnad said. “He is certainly among the great English writers of our generation. But right from (India:) A Wounded Civilization, he has never missed a chance to weigh in against Muslims, accusing them of having savaged India for five centuries.” Karnad’s remarks covered a range of Naipaul’s writing, from his characterization of the history of Hampi to his views on the Mughals. “Naipaul won the Nobel Prize in 2001. In London in 2000, word was that Naipaul would never get the Nobel because of what he’d written about Indian Muslims,” Karnad said. But he pointed out that Naipaul was awarded the Nobel barely months after the 9/11 attacks. Naipaul’s political and social opinions have divided his audiences before. Most recently, in 2011, controversy broke out over Naipaul’s remarks on women writers, all of whom, he said, were sentimental and unequal to him. His views on Islam have also drawn repeated criticism in the past. Karnad recalled, in particular, that Naipaul attended a Bharatiya Janata Party (BJP) meeting in New Delhi in 2004, where, on being asked about the Babri Masjid demolition, he is reported to have said, “Ayodhya is a sort of passion. Any passion is to be encouraged. Passion leads to creativity.” In this context, Karnad said, it was particularly dubious to honour a writer in Mumbai, a city where more than 1,500 Muslims had been murdered in the riots following the demolition of the Babri Masjid in 1992. Karnad’s remarks were met with applause, but clearly displeased the festival’s organizers. “This was supposed to be a masterclass, and you are not a master on Naipaul,” said festival director Anil Dharker. “We expected to hear you speak as a playwright. To use this stage for this purpose was rather impolite.” “I’m imitating Naipaul,” Karnad responded. “We came here to hear about theatre, sir, not about Babri Masjid,” called out an unidentifiable audience member. Karnad spent the remainder of his session speaking off the cuff about the nature and history of theatre in India. Novelist Farrukh Dhondy, who accompanied Naipaul to the BJP cultural wing meeting from where his remarks on Ayodhya were reported, says they were “a complete misquotation. He had no views on the Babri Masjid, and said only one thing about it then, that building it was an act of hubris”. Dhondy, a friend and frequent interviewer of Naipaul, was in conversation with him on the night of his award, but did not have a chance to respond to Karnad in public. “I want to put to bed the notion that Vidia is against Muslims,” Dhondy said. “Islam, as he’s said before, is not his business. He has explored, among others, the phenomenon of Islamic conversions, by a legitimate form of inquiry. He’s never written anything about it in his novels.” “Vidia has strange opinions, but he doesn’t deserve the sort of character assassination he’s received. For a distinguished playwright to link his Nobel Prize to the aftermath of 9/11 is stupid.”

The roots of Muslim discontent - By Retd. Brig. FB ALI

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The roots of Muslim discontent

By FB Ali

An analysis by Brig F B Ali (retired) (now settled in Canada) on an important issue:

The recent protests in the Muslim world against the United States (including many violent ones) on account of an amateur film have once again raised the issue of the causes behind such strong reactions, and what can be done to avoid them. While such deliberations are doubtless occurring behind the closed doors of policy-making chambers, comment has also proliferated in the media and in think-tanks. The actions recommended range all the way from acting tough to being more sensitive to the sensibilities of other cultures. However, the first step in any sensible policy-making or intelligent debate and comment should be to understand the causes underlying the problem.

There are some 1.7 billion Muslims in the world. Their homelands stretch all the way from the Atlantic across Central and North Africa to the Middle East, Central Asia, South Asia, and on to the Indonesian islands in the Pacific. They encompass many different races and nationalities, and speak many languages. But beneath this vast diversity they share certain common features that make them a single community, especially in their own view.

The first of these common features among the world’s Muslims is their allegiance to Islam. The religion Muslims practice in different regions often varies in details of ritual and even of dogma, but what is common to them all is their commitment to the ideal of Islam, as well as their avowal of the fundamental tenets of the faith that include certain core beliefs and practices.

A second common feature is their shared cultural base. While the culture of Muslims in different parts of the world varies based on their historical environment and the way it has developed, all these cultures share the same bedrock of certain traits derived from what might be called Muslim culture. This has descended from the earliest Muslims and is heavily tinged with their Bedouin culture, fostering such personal traits as individualism, self-respect bordering on touchiness, courage and fortitude, endurance, generosity and hospitality. This basic culture also encourages such collective values as loyalty to the group, sacrifice to preserve the group and its honour, and conservatism.

A third common feature is their recognition of Muslims throughout the world as one community (the Ummah). For them this is not just a figure of speech, or even an intellectual position, but a deeply felt belief. Every Muslim feels himself to be part of this community, and thus connected to each of its members, wherever they may live. Good or ill fortune befalling any part of the community is felt by other Muslims as if it had happened to them or their family.

A fourth common feature among Muslims worldwide is their antipathy to the West. This has nothing to do with the dictates of their religion (as some with vested interests would like people to believe), but is rooted in their history, specifically their feeling of having always been at war with, or under attack by, the West. These wars began soon after the rise of Islam with the conflict with the Byzantine Empire that lasted from the 7th to the 11th centuries. There followed the successive Crusades against the Muslims during the 12th and 13th centuries, while the destruction of the Muslim states in Spain in the Reconquista went on from the 8th to the 15th  centuries. The 14th and 15th centuries saw the wars between Europe and the Ottoman Empire. From the 17th century the era of European colonialism bloomed and most of the Muslim world was taken over and brought under Western rule, remaining under subjugation well into the 20th  century.

While the details of these earlier conflicts are known only to the educated, they reside in the collective memory that colours the attitudes of succeeding generations. However, several generations of Muslims now living have personally experienced the eras of colonialism and/or post-colonialism. Those who lived through the former not only experienced the humiliation of living under foreign Western rule but also felt their culture to be under attack. The ending of colonial rule often exacerbated old wounds. The botched handover of power by the British in the partitioned Indian subcontinent led to horrendous killings and displacements. In Algeria about a million Algerians died in the war to oust the French. After the Second World War the Dutch waged war for several years against the people of Indonesia in an attempt to re-establish their colonial rule.

In the post-colonial era Muslim countries found themselves caught up in the Cold War, unwilling pawns in what they saw as a Western conflict. Their leaders were often manipulated by the West to serve its own interests, while they neglected the welfare of their own people. The few who tried to assert their independence were slapped down (like Nasser in Egypt and Mossadeq in Iran). Meanwhile, Muslims were still under attack. The Israelis, with Western backing, took over Palestinian lands, and then defeated the Arabs in successive wars, taking over more of their lands. The Soviet Union decimated Afghanistan (and, later, Chechnya). Then came George Bush’s Great War on Terror which destroyed Iraq and Afghanistan (again!) with the death and displacement of hundreds of thousands of innocent Muslims. In addition, the recent development of worldwide communications has unleashed what many Muslims regard as an assault on their culture and its values by Western culture, a battle in which they are losing many of their young people.

It is this sense of conflict with the West and aggression by it against Muslims for centuries that underlies the almost universal antipathy felt towards it by Muslims. The United States, as the current leader of the Western world, now attracts to itself this suspicion and animosity, solidified by its wars in Iraq, Afghanistan, Yemen, Somalia and Pakistan’s tribal areas, and its military and economic dominance of many Muslim lands. (Many Americans who have had dealings with Muslims might be surprised to read of this general sense of animosity because they have not encountered it in their interactions with individual Muslims. The reason for this is that the average Muslim that Americans are likely to encounter is usually discerning enough not to blame individual Americans for the policies and actions of their country, and interacts with them mainly on the basis of their personal attributes and attitudes).

This latent hostility makes it easy for political and religious leaders in the Muslim world, if it serves some purpose of theirs, to arouse people against the US and the West. They can do this using even relatively flimsy reasons, but need no excuse when the triggering event is an attack, actual or alleged, against the Prophet of Islam; in fact, in such cases, they have to line up behind the aroused populace to avoid being accused of indifference. People in the West are generally puzzled by the extreme sensitivity displayed by Muslims on this particular issue, and it is worth explaining.

The Prophet plays a special role in Muslim consciousness. Since the laws and details of their religion, as well as the essentials of their culture, are largely based on the Hadith (the reported actions and sayings of the Prophet), he plays a pivotal role in their sense of the religion, personifying it as its perfect practitioner. To attack him is to attack the foundation of their religion.

Islam is an austere religion and so is its culture; it has no ‘pegs’ to which its followers can attach their emotions. Unlike other religions it has no revered saints and martyrs, no resplendent popes and bishops, no ornate churches and temples, no elaborate rituals and services, no hymns and sacred music, no pomp and ceremony, nothing that can engage the emotions of its followers. The one exception is the Prophet. He is the only entity in Islam that evokes an emotional response in all Muslims. The uniqueness of this emotion adds to its power. To demean and ridicule the Prophet is to strike at the emotional core of being of every Muslim. It is an attack on their sense of identity, on who they are, on the very basis of their existence. (The dynamics at work here are similar to those that cause denial of the Holocaust to be such an extremely sensitive issue for Jewish people. Both are existential issues).

The United States, as the principal power in the world, with its global interests and reach, needs to develop a viable policy of dealing with the Muslim world. Its policy makers (and their supporting cast of numerous advisors, think-tank ‘specialists and experts’, and media commentators) need to first understand what they are dealing with, how the vast majority of Muslims think and feel, what matters to them and why. Without policies based on such a sound understanding the US will continue to encounter the problems and crises that have so far marked its dealings with the Muslim world.

 
Posted at 11:47 AM in FB Ali, Religion