The objective of the Interest free financial system, like any other system, is the realization of efficiency and equity in allocation and distribution of resources, for which it recognizes the role of market forces and freedom of individuals. But it also recognizes the possible adverse impact of the totally unregulated market on various sections of society, particularly the poor and the disadvantaged. The pure materialistic “positive” approach never been capable of serving social interests and realizing such goals, In comparison between Interest free and conventional counterparts, both have similarities in terms of focused on eco development and social objective, aim to achieve a better life for whole people, support additional income, promote entrepreneurship activities also both are expected to rely on providing wider access to the poor, be sustainable institution which can achieve “market based for profit approach”, supported by efficient system and transparency reporting, with the focus on capacity building, combine with integration between microfinance and official system.
Interest free banking operations could enable inclusive growth in India. Financial inclusion is considered to be critical for achieving inclusive growth; which itself is required for ensuring overall growth in the country. The approach of financial inclusion in developing countries such as is thus somewhat different from the developed countries. In the latter, the focus is on the relatively small share of population not having access to banks or the formal payment systems whereas in India, the focus is on the majority who is excluded. ‘The financial exclusion of minorities has far- reaching implications for their socio economic and educational upliftment. Self-employment is the main source of income of Minorities. To empower minorities economically, it is necessary to support self-employed persons by ensuring a smooth flow of credit to them.’ This amounts to a huge sum of Rs 5,00,000 million that is lying unused in banks. It can, however, also be argued that interest free finance is merely a political issue. To give it undue credence, it ensures that the Muslim community remains financially excluded. In fact, for poor families struggling to make ends meet, it is not an issue at all.
The real issue is how to get money: either at 10% interest per day from the moneylender or from the bank. The adoption of Interest free banking can also help the Indian economy in attracting investments from cash rich Middle East countries and Muslims NRIs who would park their savings otherwise in other countries providing Interest free banking at an opportune time when India is becoming an attractive investment destinations driving on its strong fundamentals. Realizing its importance some of the private sector companies are viewing it as a mechanism for attracting capital. Five Indian companies, Reliance Industries, Infosys Technologies, comprising of stocks from the four emerging countries, Brazil, Russia, India and China. The Shariah compliant constituents in the index represent the most liquid stocks trading on the developed market exchange, specifically the Hong Kong stock exchange, the London stock exchange, NASDAQ and NYSE.