A TALE OF THE TWO NATIONS - INDIA AND MALAYSIA

Islamic Banking - Malaysia	Islamic Banking - India
http://uk.reuters.com/article/2012/12/19/uk-malaysia-banks-idUKBRE8BI08820121219	http://timesofindia.indiatimes.com/business/india-business/Islamic-banking-not-possible-Subbarao/articleshow/17330704.cms
Malaysia in "final stages" for Islamic finance legal framework KUALA LUMPUR | Wed Dec 19, 2012 5:28am GMT (Reuters) - Malaysia is in the final stages of introducing a new legislation for Islamic banking and takaful products, the country's central bank governor said on Wednesday, which gives a stronger legal basis to contracts devised by financial institutions. Governor Zeti Akhtar Aziz did not give a time frame for launch of the legal framework. She said the legislation will help the Malaysian central bank better regulate and supervise the Islamic finance industry, which globally is valued at $1.3 trillion (800 billion pounds). "The legal, regulatory and supervisory framework will need to be adjusted to accord greater clarity to the appropriate legal and regulatory treatment," said Zeti said in a speech delivered in Jakarta on Wednesday. The new framework will streamline the legal requirements across the Islamic finance industry, where there is a current lack of clarity that potentially hinders its growth ambitions. Malaysia's Islamic banks are looking to compete with conventional lenders in attracting mainstream customers, which goes towards doubling their share of the country's total banking assets to 40 percent by 2020 from about 20 percent presently. Malaysia's Islamic finance industry is currently valued at $144 billion.	Islamic banking not possible: Subbarao, Reserve Bank Governor TNN | Nov 23, 2012, 05.28AM IST KOCHI: Islamic banking won't be possible in the country due to legal problems, RBI Governor D Subbarao has clarified. Kerala is the only state that has been pursuing the possibility of Islamic banking in the country, Subbarao told reporters in Kochi on Thursday. "It is possible that other states (may) have approached RBI, but Kerala has been rather actively pursuing it. We have written to the government of India regarding what necessary amendments are needed, or indeed there must be a separate law for Islamic banking," he said. "While chief minister Oommen Chandy met me last time, he said that there are lots of non-resident Keralites living outside the country, especially in the Middle East, who want to contribute to the development of Kerala. There should be some channel of that money into Kerala and the model suggested by the state government was Islamic finance. We appreciate the objective behind that interest, but there are some legal problems in the RBI allowing Islamic banking, which has a prohibition against charging interest rates," Subbarao said. "However, the restriction on Islamic banking could be got around not through banking but through other models, which we have suggested to the Kerala government. So Islamic banking is not possible, but there are other vehicles which follow Islamic banking principles through which money can be channelled from outside," Subbarao said. Two years ago, the issue of granting Islamic banking licences was revived with prime minister Manmohan Singh stating in Malaysia that he would ask RBI to examine the demand. A few months later in February 2011, a division bench of the Kerala High Court dismissed a petition by Janata Party president Subramaniam Swamy against the government's sanction to an Islamic finance company promoted by the Kerala State Industrial Development Corporation on the grounds that it went against secular principles. In June this year, the National Commission for Minorities made a case for introducing interest-free Islamic Banking in India, which resulted in the government again referring the matter to RBI. In his monetary policy in October, Subbarao had said that Islamic banking was not possible since the concept of interest payment was ingrained in present regulations. "RBI charges interest on the liquidity support it provides to banks and also pays interest on funds that banks deposit with us," he had said.