Concept of Islamic financing makes its mark in Telangana
The concept of ‘Islamic finance’ has made its mark in Telangana. The Seva registered as Mutually Aided Cooperative Credit Societies (MACCS) started its operations in Sangareddy in 2012 and has helped thousands of small businessmen to come out of the clutches of the financiers, who otherwise charge hefty interest rates.
Hyderabad: The concept of ‘Islamic finance’ has made its mark in Telangana. The Seva registered as Mutually Aided Cooperative Credit Societies (MACCS) started its operations in Sangareddy in 2012 and has helped thousands of small businessmen to come out of the clutches of the financiers, who otherwise charge hefty interest rates.
With over 7,000 members spread across 13 branches in the state, the institution has made a turnover of Rs 11 crore during the last fiscal. Apart from Telangana, the Hyderabad-based MACCS is also running its operations in Guntur and has plans to establish branches in Mahbubnagar, Khammam, Karimnagar and Koratla shortly.
The Warangal branch which began its operations in January has already given loans to the tune of Rs 80 lakhs.
“Each month there is an increase in membership by 200 to 300 members. Since there is a demand for more such branches, we shall come up with new branches,” said Syed Muqtharul Huq, Administration & Operations Manager, MACCS.
Talking to The Hans India, he said the services offered by the Seva MACCS include, Daily Deposit, Savings Deposit, Term Deposit and Umrah Deposit. The business financing is provided to members ranging from Rs 5,000 to Rs 50,000 with a repayment limit of 90 days.
Explaining modus operandi, Muqtharul Huq said that the member needs to only pay the actual cost incurred by the branch for providing the service, which means only charges would be on services, without any interest. “Most of the members have availed the facility of deposit collection at their doorstep and we have eased the loan repayment by collecting at their doorstep.
Our members have stopped taking loans from money lenders. As their financial needs are addressed by the societies,” he added.
Mohammed Ali a cloth merchant who took loan from the Tolichowki branch said when he went to the branch in search of a small loan of around Rs 50,000 to purchase cloth he was surprised to see that unlike in conventional banking system, the processing was very simple. Moreover, he does not even have to pay interest on the loan he had taken.
He said the Seva adheres to Islamic doctrine, which prohibits both paying and taking of interest over transactions. “Ever since it came into existence, we are taking loans without any interest at nominal service charges. Earlier, he said he used to borrow money from private financiers who used to charge very high interest.
Mustafa, a small time fancy shop owner, said that he used to struggle a lot to get even a loan of Rs 20,000 to buy artificial jewellery. “Banks don’t entertain people like us and the private financiers fleece us and at times harass us.” He said the services of Seva had come as a boon for him.
Now, he can borrow small amounts without hassles. It may be mentioned here that the RBI had earlier proposed the opening of ‘Islamic window’ in conventional banks for a gradual introduction of Sharia- compliant banking.
In this endeavour, an Inter-Departmental Group (IDG) set up in RBI has examined the legal, technical and regulatory issues for introducing interest-free banking in India and has submitted its report to the government.