IslamicFinance.de

The Kerala State Industrial Development Corporation (KSIDC) has partnered with Cheraman Financial Services Limited, a Kochi-based Islamic fund. KSIDC has 11 per cent share in the Rs. 250 crore fund which is a shariah-based entity aimed at funding selected sectors. Cheraman is the new avatar of the Al Baraka fund proposed by KSIDC two years ago. Cheraman has received the go-ahead from the Securities and Exchange Board of India (SEBI) and has been registered as a trust, despite the Reserve Bank of India stating that the Banking Regulation Act did not permit Islamic banking in the country.

The Centre has offered a helping hand to Kerala in revoking a stay order by the state high court against setting up of an Islamic bank.

Noting that the court order could hamper investment opportunities in the country, Union minority affairs minister Salman Khurshid said the Centre would coordinate with the state government in dealing with the issue legally.

The Kerala government cleared the project after a feasibility study found that Islamic bank was a viable proposition in Kerala. A company was also registered to take the process forward. The share capital of the proposed bank had been fixed at Rs 1,000 crore.

According to the Islamic banking concept, the bank will not pay any interest to customers. A Sharia board can decide what sort of investments the bank can make. The bank will also have Sharia-compliant banking products.

Profits made out of the investments will be distributed to shareholders.