Attitude of Muslims and Non-Muslims towards Islamic Banking – An Exploratory Study in India

Abstract

Purpose

India is a home to the second largest Muslim population in the world. It is equally crucial to understand the attitude of non-Muslim population towards the interest-free banking in India. The firms desirous of entering into this nascent field in India are required to know the aspirations and motivations of both Muslims and non-Muslims with respect to interest-free banking. For a large number of Muslims interest-free banking may be a matter of adhering to their faith, but for the non-Muslim customers it has to address real issues like security, risk minimisation, profitability, etc.

Design/Methodology/Approach

The present study is an attempt to understand the perceptions of Indian customers towards Islamic banking. For this purpose, a representative sample of 259 respondents is surveyed with the help of a structured questionnaire developed for this purpose.

Findings

It has been found that there are differences in the attitude of Muslims and non-Muslims towards Islamic banking. Surprisingly both groups have a similar perception about the institutions of Islamic banking. Findings of the study reveal that the attitude of Indian customers can be classified into factors like awareness, ideology, implementation, features and institutions. Therefore, such factors should be considered seriously by the Islamic banks in designing their marketing strategies.

Research Limitations/Implication

This is a survey-based study. Hence a representative sample is mandatory. Due care has been taken to arrive at a sample size which is representative of the population; however, a large sample size shall lead to better results.

Practical Implications

This study can help decision makers to identify the major factors that may shape the attitude of Indian customers towards Islamic banks. This should also be of some help to the management of commercial banks in devising appropriate marketing strategies for reaching and attracting young customers.

Originality/Value

The originality of this study lies in the fact that it is a pioneering study in the Indian context which brings out the attitudinal differences between Muslims and non-Muslims with respect to Islamic banking. Further, the classification of attitude of Indian customers into factors like awareness, ideology, implementation, features and institutions adds to the originality of the study. Both these aspects of this study add value to the existing literature in the field of Islamic banking.

Citation

Faisal, M., Akhtar, A. and Rehman, A. (2014), "Attitude of Muslims and Non-Muslims towards Islamic Banking – An Exploratory Study in India", The Developing Role of Islamic Banking and Finance: From Local to Global Perspectives (Contemporary Studies in Economic and Financial Analysis, Vol. 95), Emerald Group Publishing Limited, Leeds, pp. 141-162. https://doi.org/10.1108/S1569-3759(2014)0000095017