Money & Banking

Kerala lays down guidelines for Islamic finance co

Our Bureau Thiruvananthapuram | Updated on November 12, 2017

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The Kerala Government has laid down guidelines to ensure better financial discipline and health of investments with the proposed financial institution based on sharia principles.

This comes a day after the High Court of Kerala dismissed writ petitions filed against Kerala State Industrial Development Corporation, a State Government agency, investing 11 per cent equity in Al Barakah Financial Services Ltd, the proposed institution.

FURTHER STEPS

Since the court has upheld the corporation's 11 per cent equity contribution, further steps will be taken for promoting the Islamic financial institution, the Kerala Finance Minister, Dr Thomas Isaac, and Industries Minister, Mr Elamaram Kareem, told newspersons here on Friday.

Initially, the activity will be focused in Kerala and thereafter, will be spread to other parts of the country, they said.

The company will seek a license for a non-banking finance company from the Reserve Bank of India, an approval from the Securities and Exchange Board of India for venture capital and private-equity fund activities, and go ahead with interest-free financing in the State.

APPLICABLE RULES

The total debt of the company at any time, aggregate of receivables, and total of bank balance, cash and securities should remain below 33 per cent of its average market capitalisation during the previous 12-month period.

The court has held that the company was formed under the Companies' Act and is engaged in a commercial activity.

The company will neither indulge in interest-based funding nor in activities prohibited under sharia, viz., liquor business, gambling, movies and tobacco, the Ministers said.

Published on February 04, 2011

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