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Literature Review:
1. (Dr. Mohammed Faisal 2014):India is a home of close to 17 crore Muslim

population. To do the Islamic Banking business in India, it is necessary to

understand the consumer’s preferences. Any company interested in entering in

Indian Islamic Financial Markets must know the preferences and motivation of

Indian consumers. Various important factors need to consider like different faiths,

security of savings, risk minimization, profitability, etc.

2. (Manzoor K.P. 2013): The economic down-turn forced the economist and policy

makers to look for the alternative. Islamic economist blamed high Interest rates

which results in economic down turn. Many secular nations including Europe and

America started Shariah Banking System to avoid high interest rates for the

investors. In India, economist advised to start Islamic Banking and therefore

government and RBI appointed many committees to come up with some ways to

start Islamic Banking in India. However all committees come up with the

conclusion that it’s impossible to start Islamic Banking due to current Banking

Regulation Act 1949.

3. (Jeet Singh &Preeti Yadav 2013): Many studies suggested that India can become

a big market for Islamic Financial Products. However, Islamic Banking and

Financial Products are mis-understood as religious charitable venture in India.

 Islamic financial products can be used as an alternative to solve macro-economic

problems.

4. (Riaz Akhtar and BabitaTalreja, 2012):In light of the global financial crisis, the

search for alternative banking system is must. The world has accepted and started

Islamic Financial Instruments however, in India Islamic Banking is treated as an

alien to the conventional banking system. However, it’s now necessary in India to

accept the challenges and started Islamic Banks.

5. (Mirza Ali, Muhammad Zahid, 2010):The author studies the performance of

Islamic Banks and Conventional banks of Pakistan. Last 5 years financial data is

analysed. Secondly, it compares the various products offered by the conventional

banks and Islamic banks. And lastly, various services offered by the both sector are

compared. It was concluded that consumer prefers Islamic Banking over

conventional banking.

6. (Feisal Khan, 2010): Islamic Banks are growing around 15% p.a. and has assets of

700 billion USD. Islamic Banking has different ideas and practiceshowever, they

follow conventional financial transactions in the name of Islamic banking.

7. (Boon Soon Chong, Ming-Hua Liu, 2009): Islamic Banking should follow Profit

and Loss sharing basis. However, the study on Malaysia banks found that Islamic

deposits are not interest-free. Instead of following Profit & Loss sharing basis,

Islamic Banking are following the route of conventional banking.

8. (AdeyemoLateef&MobolajiIshola, 2009): Islamic Banking and Islamic Products

are becoming popular all over the world. However, professional standards

introduced in Islamic Banking are not strictly adhere to Shariah Laws. The paper

studied the professional ethics of Islamic Banking.

9. (Mohammed Hossain, 2008): The study has done on listed banks in India.

Banking companies need to disclose many things. The disclosures are divided into

2 parts, viz Mandatory and Voluntarily. Total 184 items were selected for study out

of which 101 items were mandatory and 81 items were voluntary. It was found that

Indian banks are very good in disclosing mandatory items, however, they try to

avoid to disclosure voluntarily items.

10. (Nimrah Karim, Michael Tarazi, XavierREille, 2008): Majority of the muslim

population do not use financial services. Even when financial services are

available, many muslims tend to avoid because of interest based financial services.

Some Micro Finance Institutions are, therefore, started shariah compliant services

for low-income muslim customers. It was analysed that demand for these sharia

compliant micro finance services are very strong.

11. (MehmatAsutay, 2007): Islamic Banking and Finance industry growth is

phenomenal, but this development is not pegged with Islamic economist. Islamic

economist wants a value system i.e. social justice and human-centered economic
 growth and development. But Islamic Banking and Finance Industry is working for

profit motive and therefore gap between is keep increasing.

12. (Gait, A & Worthington, AC, 2007): Islamic finance is one of the fastest

expanding industry in the world, specially in developing countries of Middle East

and South-East Asia. But their functions are different than the religious and social

people. The paper tries to bridge the gap between these two.

13. (M.K. Hasan, Dicle, 2007): Islamic Banking is not free from risk even though it is

based on profit and loss sharing basis, there are risk associated to the customers of

the banks. High amount of amount received in these industry need to monitor

closely. International standards of BASEL must adopt by these financial institutions

to enjoy globalization and competition.

14. (Zamir Iqbal, 2007): Islamic finance industry started 30 years ago. Even though,

industry received tremendous amount of support from all over the muslim and non-

muslim community, it continue to face many challenges. If necessary policy

measures are not adopt, then future growth will have many problems.

15. (M. Kabir Hassan, Abdel-Hameed, 2007): The author study the performance

indicators of financial environment of Islamic Banks. The results indicated that in

good economy banks gave outstanding performance whereas in down economy,

banks gave negative performance.

16. (Juan Sole, 2007): Islamic financial industry has presence in 51 countries. It

started 30 years ago but rapid growth started a decade ago. Conventional banks

started Islamic banking as part of their banking operations. This merger failed to

understand by many finance practitioners. The paper tries to understand the

working of conventional bank merger with Islamic banks.

17. (WafikGrais and Matteo Pallergini, 2006): The paper analyse the corporate

governance of Islamic Financial Institutions in order to ensure the consistency of

their operations with Islamic finance principles and the protection of financial

interest of shareholders and depositors.

18. (Mohammad Nejatullah Siddiqi, 2006): Islamic finance industry has significantly

diverted its route from actual theory of Islamic Finance. The research paper try to

find the differences of theory and practical so that in future actual practice will be

same as theory.

19. (Nota Di Lavoro, 2005): Islamic banking and conventional banking are operating

side by side. It’s necessary that micro economic products are be offered by both the

sector for better diversity. It will open up new markets – interest based and

profit/Loss Sharing basis.

20. (Mohammed El Qorchi, 2005): Islamic finance sector is growing @ 15% p.a. The

reason behind this phenomenal growth is muslim migration from other places and

also wealthy gulf countries. Savers of gulf countries invest in shariahcompliant

 banks which invest money in oil producing companies and therefore yielding

outstanding profits.

21. (Bellalah, Mondher, 2004): Interest is prohibited in Islam and profit/loss sharing

basis is allowed in Islamic Financial activities. When one person gives some

amount to other for business purposes, he will not treated as creditor but partner in

business who accepts part of the profit or loss of the partnership.

22. (Zubair Hasan, 2004): Islamic banks need to evaluate for their efficiency. Regular

evaluation methods like ratio analysis may be useful in analyzing but Islamic banks

also need to evaluate based on the social responsibilities, since, their main business

is based on shairah laws.

23. (Ausaf Ahmed, 2003):Islamic Financial Institutions in India is running under

different legal status other than the banking regulations Act. Because of these

different legislations, Islamic Financial Institutions are unable to come up and

therefore, it is necessary to legalise Islamic financial institutions on the same line as

Indian Banks.

24. (Habib Ahmed, 2002): Micro Finance Investment Companies are proliferated in

last 20 years. In last 10 years many Islamic Micro Finance Investment Companies

established but they failed to prove themselves. Author studied 3 microfinance

companies of Bangladesh and gives many alternatives to conventional

microfinance companies.
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25. (M. Ali Khan, 2000): Author studied many financial institutes of 18 century and
th
19 century and came to conclusion that globalization is necessary and future
institutions should develop based on Islamic Shariah principles.

26. (A. Ahmad, 2000): Muslims are always opposed to Interest Income since its

forbidden in Islam. In the last 40 years, muslim economist started developing

alternative methods in the name of Islamic Banking. Almost all muslim countries

are running conventional banking as well as Islamic Banking. Now muslim

countries are working to eliminate completely conventional banking system, but

Islamic banking has many challenges to equate itself with conventional banking

systems.

27. (Obiyathulla I. Bacha, 1999): Derivative instruments like Futures, Options and

Forward contracts are prohibited in Islam by many scholars. The paper studied the

reasons behind prohibition of derivative instruments and discussed the importance

of Derivative Instrument and comes with solution of using Derivative products

under Islamic Laws.

28. (MonzerKahf): The paper examined 1995 export and import figures of Muslim

countries and found that total muslim countries import and export is around 7% of

the world’s total import and export. In 1995 Islamic bank’s turnover was around

70 billion USD and export and import was 340 and 350 billion dollars respectively.
 Author argues that it is possible that the entire foreign exchange transaction can

finance by Islamic Banks alone.

29. (Yahia Abdul-Rahman): Conventional banking has many facilities like help from

Central Bank, investing cash in treasury bills, etc. These measures gives

conventional bankers sufficient liquidity. In comparision, Islamic banks, doesn’t

have any favour from Central Bank. Also they cannot invest in Treasury Bills or

other liquid money market instruments due to interest. Therefore, the only option of

liquidity of Islamic Banks has hard cash which generates no returns.

30. (ShariqNisar, 2002): Islamic Financial Institutions started in India from 1934.

Islamic Financial Institutions started almost each and every state of India. 1990s

financial bubble flourished many Islamic financial institutions through the route of

NBFCs. Once the financial bubble of 1990 was over, these institutes shut down,

duping thousands of people.