24 November, 2020

Bridging The Gulf

The Kerala state’s move to back a Shariah-based NBFC is stuck

A.S. Satheesh
Bridging The Gulf

The jury is still out on the legality of state-funded Islamic banking but Kerala-based Al Barakah Financial Services sees no reason to be diffident. “We’re keeping our fingers crossed,” says Kerala Industries principal secretary T. Balakrishan a few days after the Kerala High Court said in an interim order that it would not bar an Islamic bank if procedures and permissions were adhered to. Crucially, it added, the government or its enterprises can’t associate with such an effort.

Al Barakah is planned as a non-banking finance company (NBFC) running on a profit-loss sharing model, thereby avoiding interest-based business. The Kerala government had wanted to partner in the venture, which will fund the state’s infrastructure projects with an initial corpus of Rs 500 crore. But the Shariah-compliant financial venture’s plan to tap rich nrks—an estimated 2 million are concentrated in the Gulf countries—from the Muslim community is now in doubt.

Janata Party chairman Dr Subramanian Swamy,...



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