Fact Check: Mohammad Zubair schooled after lying that Raghuram Rajan didn’t propose Islamic banking

New Delhi, Dec 16: There has been a debate on whether or not former Reserve Bank of India, Governor Raghuram Rajan spoke about introducing Islamic banking in India.

Times Now journalist Rahul Shivshankar had quoted a report by Rajan that spoke about Islamic banking. However fact-checker and Alt News co-founder Mohammad tried to fact check him. While doing so, Zubair said the the proposal to introduce Sharia compliant Islamic Banking in India, known as interest free banking was proposed by former RBI governor Dr. C Rangarajan.

Zubair claimed that the 2008 report by the Committee on Financial Inclusion was chaired by Dr. C Rangarajan and not Raghuram Rajan.

However Zubair was fact-checked and it was found that it was indeed Raghuram who had authored a report which spoke about Sharia-compliant banking. Moreover there is no record of Dr. Rangarajan making such a proposal.

In August 2007 the Planning Commission of India formed a high-level committee on Financial Sector Reforms headed by Raghuram Rajan, who was then working as a professor at the Graduate School of Business in the University of Chicago. In the year 2008 the committee presented its report titled, 'A hundred small steps.' This was pointed out by Twitter user The Hawk Eye who also shared evidence of the report.

On page 72 of the report the mention of interest free banking is made. Under the title 'Improving Infrastructure for Financial Inclusion, a para in that section reads, 'another area that falls broadly in the ambit of financial infrastructure for inclusion is the provision of interest-free banking. Certain faiths prohibit the use of financial instruments that pay interest. The nonavailability of interest-free banking products (where the return to the investor is tied to the bearing of risk, in accordance with the principles of that faith) results in some Indians, including those in the economically disadvantaged strata of society, not being able to access banking products and services due to reasons of faith. This nonavailability also denies India access to substantial sources of savings from other countries in the region.'

It is true that the mention of Islamic banking has not been made. It however says that certain faiths prohibit the use of financial instruments that pay interest. This directly points towards Islam in which earning interest on money is considered to be haram.

Zubair had written in his tweet, 'the 2008 report by Committee on Financial Inclusion was chaired by Dr. C Rangarajan, Not Raghuram. However Shivshankar had nowhere said even once that Islamic Banking was proposed in the report by the Committee on Financial Inclusion. He had said that Rajan had prepared a report on improving infrastructure for financial inclusion in which interest-free banking had been recommended.

Further we came across a newspaper report where the headline reads, 'Raghuram Rajan report advocates introduction of Islamic banking.

The RBI however rejected the proposal for Islamic Banking. Another report said that RBI Shuts Door on Raghuram Rajan's Plan to Introduce Islamic Banking in India'.