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Synopsis The study analyses (i) the role of Madrasa institution in fulfilling the educational needs of Muslim children, (ii) its relevance at present, (iii) impact of the Madrasa Modernization Programme and (iv) the allegations and canards being spread at present against the Masdrasa system of education as being the centers of fundamentalism and terrorism in India. The importance of modern education and modernization of Madrasa education for the education of Muslims have also been investigated. The study assumes its significance at present as so much questions have been raised about the Madrasas after the emergence of Taliban in Afghanistan and 9/11 terror attack in the USA. It has been found in the study that the Madrasas have emerged as an important alternative to mainstream system of education to sizeable number of poor Muslims in India. The utmost necessity has been found to redesign and reform the system qualitatively to bring it at par with mainstream schools. However, the proposed plan of Madrasa modernization is not at all needed to be applied to the Jamias or the Madrasas of higher Islamic teachings like Nadwatul Ulum, Lucknow. The Modernization of curriculum is needed in smaller Madrasas which are large in number and are growing day by day. All the recent allegations raised against the Madrasas have been found to be absolutely false and fabricated. It has been reached as conclusion in the study that Muslims in India must strive to break the shackle of educational backwardness as fast and early as possible.