Interest-Free Societies in Karnataka Show Promising Growth, Promote Financial Inclusion

Bengaluru: 11 July 2024: In the vibrant state of Karnataka, a remarkable financial revolution is quietly unfolding under the aegis of Jamaat-e-Islami Hind. Ten interest-free societies have taken root across the state, boasting a collective membership of 18,000 individuals. In the fiscal year 2023-24, these societies facilitated an impressive transaction volume of approximately 100 crore rupees, marking a significant milestone in alternative banking.

These societies aren't just about financial transactions; they're about building a community of responsible citizens. Membership criteria extend beyond standard legal requirements, embracing a holistic approach to personal conduct. Prospective members must abstain from alcohol, demonstrate honesty, practice non-violence within their families, prioritize their children's education, and cultivate a habit of saving. 

Yousuf Kanni, Secretary of JIH Karnataka, explains, "While these criteria have raised some eyebrows, we firmly believe that they contribute to the overall social fabric of the communities served." He adds, "This unique blend of financial and moral considerations sets our societies apart from conventional banking institutions."

The societies are steered by a dedicated team of 165 directors and 50 full-time staff members, reflecting a robust organizational structure. However, the current reach of these interest-free societies reveals a vast untapped potential in Karnataka's financial landscape.

With a state population of approximately 6 crore, the current membership of 18,000 represents a mere fraction of Karnataka's residents - less than 0.03%. This stark contrast highlights an enormous opportunity for growth and financial inclusion.

Kanni emphasized this point: "Our current membership, while growing, is just the tip of the iceberg. With 6 crore people in Karnataka, we've only scratched the surface. There's immense potential to extend our services to a much larger portion of the population, regardless of their religious background."

The societies are particularly keen on expanding their reach among non-Muslim communities, which currently make up only 3% of their membership. "This focus on inclusivity," Kanni notes, "could potentially revolutionize the financial services landscape in Karnataka, offering ethical, interest-free banking options to a wider demographic."

Operating under the Karnataka Sauharda Act, these societies have earned the respect of both government officials and the broader federation of societies. Their interest-free model has sparked curiosity and admiration, even among seasoned banking professionals. As one female officer remarked at the inauguration of the Kalburgi society, "I'm both surprised and delighted. After years of managing interest-based societies, I'm now inspired to establish an interest-free society myself."

On July 9, 2024, the Halqa Office Shanti Sadan buzzed with activity as office bearers from all ten societies convened for a pivotal one-day meeting. The gathering commenced with a solemn recitation by Maulana Muzaffar Hussain Nadwi, setting a tone of reflection and purpose. Muhammad Yousuf Kuni, the Halqa Secretary, delivered an inspiring opening address, paving the way for a day of intense discussions and strategic planning.

The highlight of the event was the presence of Mr. Usama Khan, CEO of Sahulat Micro Finance Delhi, whose expertise proved invaluable. As society representatives presented their annual performances, Khan listened intently, offering sage advice on thorny issues ranging from public relations challenges to disciplinary concerns. His patient and insightful responses provided a roadmap for overcoming obstacles and propelling the societies forward.

The Ameer Halqa Dr Mohammed Sa’ad Belgami’s concluding address served as a poignant reminder of the responsibilities that lie ahead, outlining priority areas for future focus. As the meeting concluded with a collective prayer, a sense of renewed purpose permeated the room. 

Kanni concludes, "This movement of interest-free societies in Karnataka represents more than just an alternative financial system; it's a testament to the power of community-driven initiatives in reshaping the economic landscape and fostering social responsibility."