PROSPECTS OF ISLAMIC BANKING & FINANCE IN INDIA : An Opportunity or a Threat

Islamic banking and finance are still an unfamiliar concept in India. The search for alternatives to conventional banking sheds spotlight on the Islamic banking but this seems to be an infeasible and unwanted burden to the Indian banking system. This paper attempts to understand the evolution, basic principles of Islamic finance, the products of Islamic banking and also highlights the present status and hurdles of Islamic banking concepts and its scope in India. The Islamic banking or the Interest free banking is still in the nascent stage but has already ventured into the International market as a competitor to the conventional banks and even made certain conventional banks offer Islamic banking products through a separate window in some countries. This is not just limited to the Islamic countries but has also found its way to the USA, UK, Germany, etcetera and co-exists without disturbing existing conventional banking but also attracting customers. Furthermore the paper investigates the possibility of implementation of Islamic banking in India, a country with second largest Muslim population and concludes with the results of the SWOT(Strengths, Weaknesses, Opportunities and Threats) analysis which clearly tells about the prospects and challenges of setting up Islamic banking and financing in India. This paper is an attempt to evaluate the Strength, Weakness, Opportunities and Threats to Islamic Banking in India