Given favourable regulatory conditions, India holds a promising growth opportunity for Islamic finance institutions, whose asset base globally is expected to more than triple to $01 trillion by 2016, a study says.
Islamic banking is already fast gaining prominence among the global financial institutions, especially in the backdrop of the banking sector woes impacting the markets like the US and UK and the concept has a huge potential market in India as well, according to market intelligence and data analysis services provider Grail Research.
India could be a significant market for Islamic banking institutions, provided there is a favourable change in regulatory environment and increased awareness among Muslims and India as a whole, said a report by Grail Research, part of US-based management consultancy Monitor Group.
"You need to look no further than at the profitability of Saudi banks (the world's highest) for reasons why Islamic finance will have strong interest globally as a growth engine for financial services," Grail Research Founder and CEO Colin Gounden said.
As per the Indian census, India has one of the largest Muslim population in the world but a large portion of this has not been able to access the banking services because as per Islamic principles, giving or receiving interest is prohibited though money can be lent on profit sharing or fee based model.
"The size of the market will be very large as the Indian population is above 100 crore and Muslim population itself is about 15 crore and majority of them, in the name of religious faith, are looking for interest free banking and finance," University of Calicut Professor A I Rahmatullah said.
