The state government has wholeheartedly welcomed the Islamic funding agencies for the badly needed funds for the infrastructure development of the state. The Secretary to the state minister for Public Works said there is nothing that prevents these funds being channelized into the State’s developmental scheme of things.
According to experts, Kerala could become a role model of tapping Islamic finance market to raise the funds for infrastructure development. Mr H. Abdur Raqeeb, Convener, National Committee on Islamic Banking at the New Delhi-based Indian Centre for Islamic Finance (ICIF), made a strong pitch for these funds at the Infrastructure Conference-2011. Mr Raqeeb quoted a Kerala High Court observation that no specific prohibition was contained in any statute that made it impermissible to carry out Islamic banking in the country. Simple regulatory changes could transform India into a regional hub for Shari’ah-compliant finance and clear the way for a much-needed wave of investment into its infrastructure, he added quoting international experts and consultants.
“When London, Tokyo, Hong Kong, Singapore and Paris have become Islamic banking hubs, why can Kerala not become one and lead the country to become a developed economy in the near future?” he asserted.
Asset-backed Islamic bonds, known as ‘Sukuks,’ provide funds for long-term investment. This tool is used in a number of developing and developed countries. India too should seek to make use of these resources, Mr Raqeeb said.
The Minister for Industries, Urban Development and IT, Mr P. K. Kunhalikkutty, too, underscored the importance of tapping the Islamic finance model at a time when traditional sources of funds are becoming either increasingly inaccessible or cost-prohibitive.
Islamic banking is seeing a surge in demands as it focuses on transparency, cooperative ventures, shared risk and ethical investing, which attracts a wide range of both Muslims and non-Muslims alike.
In Malaysian Islamic banks, more than 40 per cent of investors and 60 per cent of borrowers are non-Muslims, mostly Chinese. One in five applicants for some of the Islamic products is a non-Muslim in the Islamic Bank of Britain. The fact is, Islamic finance can do wonders. Post 9/11, petro-dollars have been actively eyeing for a safe investment destination. And this is the opportunity that India should avail of, given that it is not just a safe but vibrant investment destination.
Ms Muliani Indrawati, Managing Director, World Bank, has confirmed that the World Bank Group has ‘formally recognised Islamic finance and has designated it a priority area in their financial sector programme. The World Bank has always closely cooperated with the Islamic financial services sector. This demonstrates its commitment to help strengthen the institutional development of the industry.