Solapur: Country’s first Islamic banking service began on Friday in Maharashtra’s Solapur district.

Subhash Deshmukh, a BJP MLA from Solapur (South), and state cooperation minister has launched Sharia-compliant Islamic banking.

Deshmukh, during the inauguration of Lokmangal Cooperative Bank Ltd, at Barshi in Solapur, was called upon to adopt the model, which is also referred to as “participatory banking” after which he announced it.

“Under Islamic banking policy, depositors are not paid interest. Similarly the borrowers too will not be charged any interest for the money lent,” Deshmukh, who is the chairman of the bank, told dna.

“We will see if the Reserve Bank of India (RBI) or Government of India come out with rules in this regard… we will have to take some nominal service charge (from borrowers) for (administrative costs like) staff, electricity bills and stationery,” said Deshmukh.

“We have received Rs 2.50 lakh deposits under this. I can claim that this is the first instance in Maharashtra,” said Deshmukh,

The money was distributed to 18 needy people from the Muslim community. Some of these disbursements were made on Saturday, which was also PM Modi’s birthday.

“We will give most loans to (poor from the) Muslim community… It is Modi saheb’s dream. The Muslim community is poor and must be economically uplifted,” he noted.

The BJP leader added that the bank has 9 branches, including 8 in Solapur and 1 in Pune, and all of them would get a separate counter for such Islamic, interest-free deposits and loans.

Other financial institutions and banks in Maharashtra should also follow and adopt this model were interest-free deposits will be accepted from Muslims and non-Muslims at zero rates of interest to ensure their financial inclusion, he added.