Cheraman Financial Services Ltd, India’s first interest-free financial services company backed by the Government, aims to channel Gulf NRIs’ savings as well as a small chunk of West Asia’s petro dollars into the country’s infrastructure development.

The company, with an authorised capital of Rs 1,000 crore, was conceived by the former Left Democratic Front government of Kerala.

It had wanted to tap into the non-productive savings of a large section of Indians in the Gulf who wanted to invest but were averse to the idea of interest. Cheraman recently got the Reserve Bank’s permission to function as a non-banking finance company and was formally launched last week.

Speaking to Business Line , A. P. M. Mohammed Hanish (IAS), Managing Director of CFSL, said the company would promote value-based entrepreneurship and fund only Sharia-compliant products.

“The company’s business model is based on interest-free financing (IFF), which is based on the economic principles of Sharia,” he said. This would mean that there would be no speculative business and no Sharia-banned business ventures. There would be no funding to conventional banks, insurance, entertainment enterprises and non-halal food industries.

“Leasing and equity finance will be our main products,” Hanish said. Leasing and equity funding are part of the IFF model, which lays stress on risk-sharing between the financier and the entrepreneur.

Hanish, who is also the MD of Roads and Bridges Development Corporation of Kerala, noted that the Gulf countries have invested huge amounts of sovereign and individual funds abroad and a sizeable chunk of these were in IFF businesses. “Cheraman will woo a portion of these funds so that Kerala’s and India’s infrastructure can be developed.”

Funding plan

The funding by the company would mainly be through BOT (build, operate and transfer) and joint ventures. Venture capital will be a key area and entrepreneurs in the Start-up Village, Kochi, would be ideal candidates.

The first BOT project will be to develop a Wakf property. After creating value on the property and sharing the rental income for 18 years, the property will be returned to the Wakf authority.

Hanish pointed out that 11 per cent of the authorised capital will come from Kerala State Industrial Development Corporation.

Others’ stakes will be limited to 9 per cent. The Government would have two directors on the board. The Cheraman Group also has other companies, such as Cheraman Funds Management Ltd, Cheraman Infrastructure Private Ltd and the Cheraman Fund.

Hanish hopes the company will be able to soon attract large investments from West Asia and South-East Asia. A road-show would be conducted in the Gulf next month. “Aside from a few Sharia-banned businesses, we can fund any viable and ethical business ventures, particularly those that will help develop infrastructure and entrepreneurial talents of the youth,” he said.

> basheer.kpm@thehindu.co.in

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