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Virtually ruling out introduction of Islamic banking, the Finance Ministry today said it has "no relevance" as the government has already introduced a host of financial inclusion schemes like Jan Dhan. The objectives of the financial inclusion for which Islamic banking was explored by RBI has no relevance, as government has already introduced other means of financial inclusion like Jan Dhan Yojana and Suraksha Bima Yojna for all citizens, Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Lok Sabha. He further said RBI had set up an inter-departmental group on Islamic Banking and the entire exercise was aimed at promoting financial inclusion, accessing huge market potential to attract finance from Gulf countries for infrastructure development. "However, on consideration of inter-departmental group report, it is observed that even to introduce limited products, various legal changes would be required," he said. In another reply, Gangwar said, RBI reduced its policy repo rate cumulatively by 175 basis points during January, 2015 to November 24, 2016. "In response, the weighted average lending rate (WALR) on fresh rupee loans and outstanding rupee loans declined by 108 basis points and 76 basis points respectively (up to October, 2016)," he said. With the introduction of base rate system by RBI from July 1, 2010 and thereafter Marginal Cost of Fund based Lending Rate (MCLR) system with effect from April 1, 2016, all rupee lending rates have been deregulated and these rates are determined by the banks themselves as approved by their respective Boards, based on their cost of funds and commercial judgement, he added. In a separate reply, Minister of State for Finance Arjun Ram Meghwal said after withdrawal of the Legal Tender of Specified Banknotes (SBNs) various offices of RBI have provided Rs 238 crore in cash to the post offices.
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