A delegation of Indian Centre for Islamic Finance led by its General Secretary, H Abdur Raqueeb, after holding talks with Mr Dinesh Khara, Managing Director and CEO of SBI (State Bank of India) Mutual Fund and his colleagues at SBI Mutual Fund Headquarters in Mumbai, issued a statement in which ICIF welcomed the move and said SBI Shari’ah Equity Fund will turn out to be a landmark product for excluded segment of Indian investors in addition to mobilising funds for the Indian capital market.
ICIF believes that the Securities and Exchange Board of India (SEBI), after taking this bold decision of approving the Mutual Fund based on Shari’ah will also launch Sukuk – Asset based bonds based on Shari’ah principles for the infrastructure development of the country. Sukuk has been introduced in developed countries like the UK and Germany and developing countries like Malaysia and Indonesia with great success.
In a submission to the Select Committee of Rajya Sabha on Insurance (Amendment) Bill 2008, ICIF has appealed to the chairman and members of the Committee not to omit the mutual insurance from the draft and include Takaful as well which a successful form of mutual Insurance. In 2008, Dr Raghuram G Rajan, the present Governor of RBI, while heading the Committee on Financial Sector Reforms-CFSR, recommended interest-free finance in the banking sector.
Welcoming the launching of SBI Shari’ah compliant Mutual Fund, ICIF appealed to Prime Minister and Finance Minister to look into and initiate: 1) Sukuk- Asset based bonds for the infrastructure development. 2) Takaful- Mutual Insurance for the inclusion of the people who have not been reached by conventional insurance. 3) Interest-free finance in the banking sector as recommended by Dr Raghuram Rajan for inclusive growth with innovation.
Presently, in India there are 600 to 700 companies that are listed in India’s Stock Exchange that are Shari’ah-compliant. The new SBI’s Shari’ah based mutual fund has got the approval of the All India Muslim Personal Law Board. Last year, India’s first Shari’ah index was launched by the Bombay Stock Exchange which keeps an eye on the performance of Shari’ah-compliant companies. These companies have given a return of 46 per cent much better than the 30-share BSE Sensex index which gave the annual return of only 41 per cent. India is the only country, apart from Muslim countries, to have a state-owned bank offering a Shari’ah-compliant fund after the U.K. which issued sovereign Islamic bond last year.