Islamic finance refers to a financial system that is consistent with the principles of sharia, the sacred law of Islam. It is different from reular banking in that it prohibits earning of interest (or riba) through the business of lending. It also prohibits direct or indirect association with businesses involving alcohol, pork products, firearms and tobacco. It also does not allow speculation, betting and gambling.
Banks were assigned a special role in the economic development of the country, besids ensuring the growth of the financial sector. The banking regulator, the Reserve Bank of India, has hence prescribed that a portion of bank lending should be for developmental activies, which it calls the priority sector.
SHG primarily comprises members with homogenous social and economic backgrounds. It is a voluntarily formed group consisting of women, rural laboures, small farments and micro-enterprises. The concept is akin to the concept of democracy. SHGs are formed by the the members, for the members and of the members. The number of members ould be as less as five and could even go up to 20. They save and contribute tp a common fund which is used to lend to the members. Since they know wach other, members do not seek collateral from each other.
The Bank for International Settlements defines oversight as a central bank function, whereby the objectives of safety and efficiency are promoted by nonithing existing and planned systems, assessing them against these objectives and, where necessary, inducing change".
Exchange Earners Foreign Currency (EEFC) account is foreign currency-denominated account maintainet with banks dealing wuth foreign exchanges. The Reserve Bank of India introduced this scheme in 1992 to enable exporters and professionals to retain their foreign exchange receipts in banks without converting it into the local currency. Any person residing in India who receives inward remitances in foreign currency or a company with foreign currency earning can open EEFC account but they dont't earn any interest from the deposits and it is a non-interest bearing scheme.
In 2006, the Reserve Bank of India allowed banks to use non-bank intermediaries as business cprrespondents, or business facilitators, to extend banking and other financial services to areas where the banks did not have a brick and mortar branch present. The objective behind it was to aid the process of financial inclusion and consequently take banking to the renotest areas ogf the country and mke them bankable.