Indian Islamic property and stock funds are starting to give the world's third-largest Muslim population Shariah investment options in a nation where banking in line with the Koran's tenets is prohibited.
Taqwaa Advisory and Shariah Investment Solutions Pvt Ltd, a Mumbai-based consultancy, is setting up the Rs 250 crore ($44 million) fund on behalf of a company backed by the Kerala state government, Director Shariq Nisar said yesterday. Secura Investment Management (India) Pvt Ltd manages the country's only other such real-estate vehicle. India has two Shariah equity funds and BSE, the stock exchange operator, introduced a new Islamic share index on May 2.
India hasn't made any progress on allowing Islamic banking since the central bank formed a committee to look at the issue in 2005, while no sukuk have been issued in the country due to a lack of legal recognition. The South Asian nation that has the highest sovereign bond yields among the 10 major Asian emerging markets is unlikely to introduce legislation in the near term as such a move may anger the 81 per cent Hindu majority, according to Kuala Lumpur-based consultancy Amanah Capital Group.
"Islamic finance is in a nascent stage in India and definitely any new product will create more awareness and opportunity," Taqwaa's Nisar said. "There's a lack of awareness and interest, which will take some time to be removed."
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The fund will be run by Al Barakah Financial Services, whose shareholders include Kerala State Industrial Development Corporation, which is owned by the state government, Nisar said. The vehicle will invest mainly in commercial real estate in the southern Indian state, he said.
