IslamicFinance.de

After overcoming an array of uncertainties and legal combats and complexities, the first ever Islamic finance compliant project is all set to take off in Kerala. If things go as planned, the Waqf Land Development Scheme by the Cheraman Financial Services Limited (CFSL) will be soon materialized in Kannur in northern Kerala. Kicking start a new model of investment a five storied shopping complex will be erected in Kannur. The funding by the company has been done mainly through BOT (build, operate and transfer) and joint ventures. After creating value on the property and sharing the rental income for 18 years, CFSL will give back the property to the Waqf Board.

India’s central bank has allowed a firm in the southern state of Kerala to operate as a non-banking financial company that follows Islamic principles ? a small step towards developing syariah-compliant finance in the country. Cheraman Financial Services said it had obtained approval to operate from the Reserve Bank of India (RBI) and would follow the Islamic ban on interest. RBI governor Duvvuri Subbarao has said Islamic banking was not possible in the country but syariah-compliant products could be delivered through alternative means.

Cheraman Financial Services Ltd, jointly promoted by the Kerala government and non-resident Keralites, is to fund hundreds of cash-strapped student startups coming up in Kerala state, India. The Islamic financial institution has set aside Rs150mn for companies in the Startup Village, Kerala’s answer to Silicon Valley, from its Rs2.5bn Alternative Investment Fund that primarily targets the Shariah-compliant service and manufacturing sectors. There are more than 900 firms with innovative products started by students waiting to set up their units. At least one company of students with innovative ideas is being set up each day at the Startup Village. The Village aims to host 3,000 startups by 2020. Coming up on the same campus in this port city is the Kerala Technology Innovation Centre, another zone exclusively for bio-technology.

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.