“My protest is in principle to all government moves to bypass legislation allowing 200 Million Muslims to fully enjoy the constitutional freedom of religion, and force them to accept its own version of Islamic Finance and Banking, with its own bureaucratic superstructure imposing what is Islamic for the Indian Muslims. Compared to Malaysia, Indian Government has nothing to do with Islam and its special needs for Muslims, India being a secular state”, Said Ghulam Muhammed, Media Activist and Community affairs commentator. He further said, “Besides, Government’s own record of managing any financial institutions is that Nationalized Banks, insurance companies, pension funds, are all fraught with graft. How can Muslims trust the government not to mismanage and divert funds from Muslim corpus and deposits to other than Muslim channels? A mutual fund by definition is risk prone. Who will put the Government and its agencies into dock, if they declare losses arbitrarily and siphon our assets by any number of clever manipulations, all appearing to be legal, as Mutual Funds are entirely based on clear mandate from investors, to allow the managers to do what they feel is good investment and these managers have full authority given by small print in agreements, to take the investors on a wild ride. All such risks should be kept in mind, before Muslims should give full support to the well-meaning Congress Minority Minister, who has been so roundly harassed by his own colleagues, to water down his demands on Muslim preferred financial legislation, allowing them to manage their financial affairs freely, in conformity with Quranic injunctions as well as their own accountability over their community affairs.”
According to indiatomorrow.net “The Indian Centre for Islamic Finance (ICIF) has welcomed the move of the Government of India to float a Shariah compliant mutual fund to attract investments from the Muslim community and financing Haj pilgrimage.”
It is “a welcome step towards introducing an alternate interest free finance in the banking sector of the country,” said H. Abdur Raqeeb, General Secretary, ICIF.
K. Rahman Khan, Minister of Minority Affairs, has reportedly come up with the idea to tap Muslim investments said to be lying idle as interest is prohibited in Islam. “There is a great need for investment. The capital raised would be used to fund minority welfare,” Rahman Khan was quoted as saying by Hindustan Times on 09 Jan 2014.
According to the English daily, Shariah Mutual Fund is aimed to finance minority welfare schemes by also reinvesting earnings from Wakf, or Islamic endowments of charity, usually in the form of prime real estate. The fund will be floated by State Bank of India.
The minority affairs ministry has reportedly asked the SBI to prepare a feasibility report. The bank has already sent a team to Malaysia, which runs a similar successful model.
According to Mr. Raqeeb of ICIF, the government proposal is based on the Tabung Haji, Malaysian Pilgrimage Management Fund model which is an unique Islamic financial institution, designed as per international best corporate governance framework with the aim of mobilising savings of individuals and successfully managing investment in an Islamic way in order to fulfil the life-long desire of the individuals for performing the Haj.
“The success of Tabung Haji is due to mainly the full support of the Malaysian government as well as the people in that country,” said Mr. Raqeeb.
Mr. Raqeeb, who is also Convener, National Committee on Islamic Banking, has been striving for long for interest-free Islamic banking in India. The new development has renewed his hope that “GOI and RBI will soon introduce Interest free finance in the banking sector as recommended by the present RBI Governor, Dr Raghuram Rajan, Sukuk, Islamic asset based bonds for infrastructure development as well as Takaful- co-operative insurance in the insurance sector.”