The Kerala High Court today stayed the state government's proposal to start an Islamic financial institution on the lines of Islamic Bank.
"The government shall not commence operation of the proposed institution," a division bench comprising Chief Justice S R Bannurmath and Justice Thottathil B Radhakrishnan said while hearing a petition filed by Janata Party leader Dr Subramanian Swamy.
According to the petitioner, the government in its October 14 order, had accorded sanction for registration of Islamic Finance serving company by Kerala State Industrial Development Corporation (KSIDC) to provide financial services in accordance with Shariah law.
Under the proposal, KSIDC would contribute about 11 per cent equity and the corporation was taking steps to promoting Islamic financial institution. The proposed institution will not collect or charge interest for financing, the petitioner said.
According to Swamy, the CEO of the proposed company has to report to the Shariah advisory board.