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Our Bureau

Hyderabad, July 6

Lack of diversification in the financial system and under or inappropriate regulatory mechanism is exposing Indian financial markets to adverse developments at a global level, according to Mr Vepa Kamesam, Managing Director, Institute of Insurance and Risk Management.

In his inaugural address at the Islamic Finance and Investment Conference here on Saturday, Mr Kamesam said though benefits of global financial integration had lately come under the scanner due to the sub-prime crisis in the US, the corporates and governments the world over were increasingly depending on international financial products and opportunities.

The global integration of financial markets was also getting fast-paced as a diverse group of investors were ready to own up risk, cutting across geographical barriers, he observed.

Referring to the conference, Mr Kamesam said the Islamic finance industry based on the principles of Shariah was gaining popularity.

In his presentation on investment opportunities for ethical funding within the existing regulatory framework, Dr M.Y. Khan, Chairman, Madhya Pradesh Stock Exchange, said the ethical investment practices as enshrined in Shariah had no conflict with social and responsible investment.

“According to Shariah, any economic activity should not result in output in wine, narcotics, exploitation of consumers and natural resources, among others. There should be no over-pricing and insider trading in equities,” he said.

Taking interest on money was also against Shariah principles and investments should be based on profit or loss sharing basis, he added.

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