Ahmad told a press conference that there was a strong demand for such banking service in Kashmir but RBI would need to examine the proposal. “We have not given a serious thought to it, but there is a lot of demand for Islamic banking in the state. We will examine the proposal and we have to also take RBI on board,” he said. Currently , there are no guidelines for Islamic banking, which is based on the principles of not charging interest, something that is prohibited under Islam.
Recently, RBI had suggested that it would review the norms. “Towards mainstreaming these excluded sections, it is proposed to explore the modalities of introducing interest -free banking products in the country in consultation with the government,” it had said in its annual report for the last financial year.
J&K Bank had seen its powers curtailed by RBI a few years ago and is now working on commercial lines, although it does share a special relationship with the state government.Ahmad, however, warned that the bank is passing through turbulent times. He said that strengthening and cleaning of the bank’s balance sheet would remain his top priority for the next six quarters and warned that the lender may even slip into losses.
“In order to improve the bottom-line growth, we may not book profits, pay dividends or taxes. There may be no contributions to CSR spending.”Speaking about the bank’s position on the impact of the current unrest on the valley’s traders and businessmen Ahmad said, “We know that the current unrest has led to the drying up of cash flow of our borrowers here and we remain committed to support them in every possible way .”
He said that the bank had moved an application for “appropriate measures” to RBI.