Friday, February 4, 2011

Islamic Banking System gets legal nod in Kerala

The Kerala High Court has given approval to the non-banking finance company based on the Islamic principles by Kerala State Industrial Development Corporation (KSIDC). Earlier the President of Janata Party Subramanian Swamy and others filed a petition against the company stating that it is an act to promote a particular religion.

However the High Court Bench dismissed the petition when (KSIDC) proposed to carry out operations according to Shariah-complaint manner encompassed with the law of the country.

The Director and Executive Manager of the company Mr Najeeb said “It is a very favorable development and the board of directors will meet to decide on the plan of action.”

He also said The whole idea of the concept is to make use of funds without interest, directly or indirectly, for infrastructure projects in Kerala and reward the investors through profits.”

A few months ago Prime Minister Mr Manmohan Singh said in Kuala Lumpur said that he would propose RBI to survey demand of Islamic banking in India but the Governor of RBI Mr D Subbarao was not in favor of setting up such a system in Kerala, he justified it by saying that such a system can not exist under the provisions of the current Banking Regulations Act.

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