Wednesday, 30 December 2015

Interest-Free Banking: Reaching out to a wider base

RBI Committee report of Mr Deepak Mohanty - RBI Committee on Medium term Path for Financial Inclusion headed by Shr. Deepak Mohanty has released its report and recommendations on 28-12-2015 to increase financial inclusion in India.

Chapter 5 of the report titledInterest-Free Banking: Reaching out to a wider base’ focuses on the importance of Interest free banking system in depth and recommends Interest Free Windows in existing conventional banks. The report highlights the central concept in interest-free banking and finance is justice.

Recommendation 5.1
The Committee recommends that commercial banks in India may be enabled to open specialised interest-free windows with simple products like demand deposits, agency and participation securities on their liability side and to offer products based on cost-plus financing and deferred payment, deferred delivery contracts on the asset side.

RBI now seeks public comments and opinions in this regard. Kindly see the following note from the Press Release of RBI regarding submitting comments on the report:

"The Reserve Bank of India has today placed on its website, the Report of the Committee on Medium-term Path on Financial Inclusion (Chairman: Shri Deepak Mohanty). Comments may please be emailed or sent by post to the Principal Chief General Manager, Reserve Bank of India, Financial Inclusion and Development Department, 10th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai-400001 by January 29, 2016."

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