Efforts of the Kerala government to start a Sharia compliant Islamic investment company could soon be reality with the state high court giving the green signal for it. The Kerala High Court on Thursday dismissed a writ petition filed by Janata Party president Subramanian Swamy and others against the government participation in a company based on Islamic principles. Kerala government was hoping to float an NBFC in the name of Al Barakah Financial Services Company through the state-owned Kerala State Industrial Development Corporation (KSIDC) in association with some Kerala based entrepreneurs who are averse to an interest-based system.
?This is a positive sign and could help bring money to meaningful infrastructure projects while helping earn investors better returns than the traditional banking sector,? Abdussalam Ahamad, director of Al Jamia Al Islamia, an institute specialising in Islamic finance told FE. ?Islamic teaching encourages trading, investment and charitable giving, but frowns on the giving or receiving of interest, or riba, which it categorises as usury. Sharia stipulates against earning fixed returns such as interest, warns against excessive speculation and shares the risk of the business,? he said.
The interim order of the high court had earlier stayed the Kerala government order permitting KSIDC to invest 11 % share in the proposed company.