Category Archives: India

India’s first Shariah-compliant mutual fund collects 50 million rupees

India’s first Shariah-compliant mutual fund collects 50 million rupees

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India’s Taurus Asset Management has collected about 50 million rupees in the country’s first actively managed sharia-compliant equity mutual fund it launched in February, chief executive Waqar Naqvi said on Wednesday.

"Around 5 crores… not bad given the fact that even very large fund houses collected some 2 crores or 3 crores," Naqvi said, referring to the mop-up.

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Keeping the faith: Shariah-compliant services in India

Express Money: Keeping the faith: Shariah-compliant services in India

Shariah-compliant services are emerging as the next hot trend in the financial space in India. Already quite a rage in the Middle East, these services are picking up pace in India as well. In the first week of this month, Reliance Money announced the launch of its Shariah-compliant Portfolio Management Services (PMS) in partnership with Parsoli Corporation.

In addition, a number of mutual fund houses like Reliance Mutual Fund, Way2Wealth, Edelweiss and UTI Asset Management also plan to launch Shariah-compliant services in the coming months.

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Aligarh Muslim University to offer Islamic Banking course

Aligarh Muslim University to offer Islamic Banking course

The Aligarh Muslim University is set to offer a course on Islamic banking and finance from the next academic year, an official said yesterday.

“AMU vice chancellor P K Abdul Azis had a detailed discussion recently with a team of experts consisting Mohamed Nejatullah Siddiqui, former AMU professor and a well known expert on Islamic banking and finance, Sayed Mohamed Beary and Shariq Nisar of Bearys Amnah Investments in Bangalore,” university spokesman Rahat Abrar said.

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Shariah-compliant mutual funds growing in India

Shariah-compliant mutual funds growing in India

In a move that would enable Muslims in India to participate in the stock market, four asset management companies — Reliance Mutual Fund, UTI Asset Management, Way2Wealth and the newly-approved Edelweiss Mutual Fund — are planning to launch Shariah-compliant mutual funds in the coming months.

The move comes at a time when there is talk of Taurus Asset Management, which was tipped to come out with a Shariah fund earlier, is withdrawing its application from SEBI.

More than enabling Muslims to participate in the stock market, the reason for these asset management companies (AMCs) to launch a fund in the Shariah space is purely commercial. The funds are eyeing scores of rich and religious Muslims who do not invest in interest-yielding instruments or non-Shariah compliant stocks.

Shariah, the religious law of the followers of Islam, has strictures regarding finance and commercial activities permitted for believers. Arab investors only invest in a portfolio of ‘clean’ stocks. They do not invest in stocks of companies dealing in alcohol, conventional financial services (banking and insurance), entertainment (cinemas and hotels), tobacco, pork meat, defence and weapons. According to experts in Islamic investments, Muslims are only allowed to invest in companies where interest bearing income is less than 10% in any condition.

With regards to compliance, the current share of Indian Shariah-compliant market capitalisation (at 61%) is highest even when compared with the number of Islamic countries such as Malaysia (at 57%), Pakistan (51%) and Bahrain (6%). “We have been looking at the options in the Shariah space for some time now. The process to launch a Shariah fund is on. We are discussing about it with our partners,” said UTI Asset Management chief marketing officer Joydeep Bhattacharya.

The move will augur well for UTI, because it is already managing an offshore Shariah fund, including West Asian investors, partnering Al Madina Asset Management.

According to UTI sources, the fund house is likely to tie up with Mumbai-based Parsoli Corporation for launching the fund. The Shariah board in Parsoli Corporation will certify the scheme and the Parsoli Islamic Equity index would be the benchmark for the fund.

After Reliance Money launching its Shariah-compliant portfolio management service for Muslim HNIs, group firm Reliance Mutual Fund is close to filing its prospectus with the regulator to launch an Islamic fund. “The group is in advanced stage of talks with an Islamic institution to launch the fund. As a next step, Reliance is also planning to launch its entire spectrum of financial services the Shariah way,” said a company insider.

However, it will take some efforts of the part of these funds to get necessary approvals from the market regulator. According to sources in the fund industry, the regulator is not very happy to approve these funds as it feels, these schemes — intentionally or unintentionally — solicit only a class of investors to invest in them. Moreover, SEBI is still uneasy about the conduct of such funds, the screening process (of investible stocks) and the method to weed out ‘impurities’ as charity, sources said.

Devout Muslim investors weed out a portion of their gains in anticipation that these are due from investments in non-Shariah assets.

Muslim businessmen ask Government to start Islamic Banking in India

Muslim businessmen ask Government to start Islamic Banking in India

Some leading Muslim businessmen from Uttar Pradesh have asked the government to allow Islamic banking in India.

In this regard, a proposal has been submitted to the Planning Commission by them for setting up Islamic Development Bank, which would not charge interest on loans etc, under Islamic norms.

Islamic Development Bank is headquartered in Jeddah, Saudi Arabia, and it does not run from the interest income. Also, the money from the bank can not be used for financing businesses related to liquor, pornography etc. This is being run by the Organisation of Islamic Countries.

“There is a need to open such banks in India as Islam considers interest as ‘haraam’ (unethical) and therefore, Muslims are reluctant to take loans from the banks as interest is charged in such banks,” member of Islamic Development Bank Mohammad Ishaak told PTI.

He said one of the reasons for widespread poverty among Muslims was that they were not open to taking loans from the banks.

He added that 14 crore Muslims of the country will be able to do business once they start getting interest-free loans.

“Therefore, we have sent a proposal to Planning Commission Deputy Chairman Montek Singh Ahluwalia so that we can also start an Islamic banking with the help of Islamic Development Bank in Saudi Arabia,” he said.