SHARIAH-COMPLIANT BANKING Well worth a try

Shafeeq Rahman, a Delhi-based researcher on issues relating to Muslims, said Muslims suffered more for reasons of faith as many of them did not have bank accounts as Islam prohibits accrual of interest on savings. Only 63 per cent of Muslims, he says, have bank accounts compared with the national average of 78 per cent and a measly 9 per cent have post office accounts as against the national average of 14 per cent. This means that 37 per cent of the Muslim population remains outside the banking system and was taken unawares by the note ban.

According to Rahman, Muslims also suffered more because of their low literacy levels (the literacy level of Muslims, at 69 per cent, is lower than the national average of 73) and low incomes: 63 per cent of them earned less than Rs.1.20 lakh annually and only 6 per cent earned Rs.3 lakh or more. He said that of the 55 deaths following the demonetisation decision in November, 12 were in the Muslim community. His study also revealed that Muslims largely remained engaged in small-scale business activities or were self-employed, mostly in the unorganised sector with no accounting or auditing of their earnings, and hence with low participation in banking activities. And hence, they were the ones who faced the biggest blow in the wake of demonetisation.

Published at Front line Hindu dated 03.02.2017

This Indian ad celebrating Ramadan spirit could be the tip of the iceberg

“India has a sizeable Muslim population of 172 million people, almost 15 per cent of the 1.2 billion total (according to the 2011 Census),” said Shafeeq Rahman, a researcher on halal markets. “At least 14 per cent of the Muslim population belong to the upper class, a big market for companies. Special products and offers by mainstream companies during the month of Ramadan would be a bridge to reach out the Muslim consumer and could expand their market for untapped customers.” He cited the example of Britannia Industries’ special morning bread for Ramadan.

However, Shafeeq also noted a general failure among the mainstream companies to fully tap the potential of this market. “After Diwali [the Hindu festival of light], Ramadan could be among the biggest shopping festivals in India. Muslims throughout the country buy new clothes, just like in Diwali. Clothing brands can do more to leverage this potential,” he remarked.

So far, the unorganised segment has managed to garner the majority share of the Ramadan-focused market. In Chennai, a major city in South India, it’s common for customers to receive advertising pamphlets along with their morning newspapers. These pamphlets feature special Ramadan offers from city-based companies that target the 10 per cent of the Chennai’s population who are Muslim.

Shafeeq also noted that in the tourism sector it is the smaller tour operators who have aggressively marketed travel packages for those who want to spend the Holy Month making a pilgrimage. “Many of the affluent Muslims prefer to spend the whole month in the Holy City,” he said. “This [travel packages during Ramadan] is something that the bigger tour companies can surely launch.”

Published at MySalaam dated 07.06.2017

Interest-free not Islamic banking is the preferred choice

Shafeeq Rahman, a doctorate in Islamic economic thought from Jamia Millia Islamia university, said the National Sample Survey Office’s survey on debt and investments in 2013 reveals that 62.69% of Muslims operated a bank account compared to 73.57% Hindus, 80.26% Christians and 96.99% Jains. Only 8.72% of Muslims had post office savings accounts compared to 14.11% Hindus. “If government introduces interest-free banking, Muslims will opt for it. Money lying without any productive benefit will come to the mainstream,” said Rahman.

Religious reasons apart, another cause for the low representation of Muslims in banking is that, because of higher default rates in loans, many lending institutions have identified localities with Muslim concentration as areas of high default and refuse to disburse credit in these places.

Rahman agreed to this and said, “We should start interest-free banking and not Islamic banking so that all people, including non-Muslims, can use these services.”

Published at Hindustan Times dated 23.10.2016