By Mumtaz Alam, India Tomorrow,
New Delhi, 11 Jan 2014: The Indian Centre for Islamic Finance (ICIF) has welcomed the move of the Government of India to float a Shariah compliant mutual fund to attract investments from the Muslim community and financing Haj pilgrimage.
It is “a welcome step towards introducing an alternate interest free finance in the banking sector of the country,” said H Abdur Raqeeb, General Secretary, ICIF.
K Rahman Khan, Minister of Minority Affairs, has reportedly come up with the idea to tap Muslim investments said to be lying idle as interest is prohibited in Islam. “There is a great need for investment. The capital raised would be used to fund minority welfare,” Rahman Khan was quoted as saying by Hindustan Times on 09 Jan.
According to the English daily, Shariah Mutual Fund is aimed to finance minority welfare schemes by also reinvesting earnings from Wakf, or Islamic endowments of charity, usually in the form of prime real estate. The fund will be floated by State Bank of India.
The minority affairs ministry has reportedly asked the SBI to prepare a feasibility report. The bank has already sent a team to Malaysia, which runs a similar successful model.
According to Mr. Raqeeb of ICIF, the government proposal is based on the Tabung Haji, Malaysian Pilgrimage Management Fund model which is an unique Islamic financial institution, designed as per international best corporate governance framework with the aim of mobilising savings of individuals and successfully managing investment in an Islamic way in order to fulfil the life-long desire of the individuals for performing the Haj.
“The success of Tabung Haji is due to mainly the full support of the Malaysian government as well as the people in that country,” said Mr. Raqeeb.
Mr. Raqeeb, who is also Convenor, National Committee on Islamic Banking, has been striving for long for interest-free Islamic banking in India. The new development has renewed his hope that “GOI and RBI will soon introduce Interest free finance in the banking sector as recommended by the present RBI Governor, Dr Raghuram Rajan, Sukuk, Islamic asset based bonds for infrastructure development as well as Takaful- co-operative insurance in the insurance sector.”
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