ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Faith-based Financial Exclusion

Where Does Jammu and Kashmir Stand?

The United Kingdom was at the forefront of opening Islamic windows in its financial system with the objective of achieving financial inclusion of Muslims without compromising their value systems. India refused to think in that direction with its large Muslim population being excluded from financial deepening, which is a crucial pillar of poverty reduction. The consequent lower business potential of districts with a higher proportion of Muslim population has led to lower branch density and loan rates, affecting the general population as well. Jammu and Kashmir, in districts where the proportion of Muslims is higher, also reflects these trends observed in other states.


The United Kingdom (UK) has, for over 30 years, been a leading voice in the development of Islamic finance. The UK’s commitment to Islamic finance has puzzled many, especially because it is not a predominantly Muslim country. In the UK, the number of Muslims is around 2.7 million, accounting for less than 5% of the total population of about 67 million.1 The UK’s commitment is founded on two principles: (i) the firm belief in financial inclusion, that is providing bank accounts and offering investors opportunities to put their money to good use; and (ii) the belief that people should not have to compromise their values while doing business. The UK has opened Islamic finance windows and built considerable expertise in structuring Sharia-compliant financial products so that people who wish to follow Sharia principles can access banking channels and do business.

India is home to the third largest Muslim population (195 million) in the world, and they account for about 14% of the country’s population. However, India has not opened Islamic windows in its financial system. Recent research has shown that the lack of an Islamic window has kept the faithful out of financial deepening as dealing with interest-bearing instruments is against Sharia. This article seeks to view this issue in the context of Jammu and Kashmir (J&K).

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Updated On : 22nd Nov, 2021
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