The approval of an NBFC (Non Banking Financial Company) of Kerala named Cheraman Financial Services based on Islamic principles by Reserve Bank of India is to be welcomed by all.
Cheraman Financial Services Ltd is a joint venture of Kerala State Industrial Development Corporation (KSIDC) with 11% share and some of the prominent NRI’s of Kerala with 89% share and it is expected that very soon Islamic Finance will be introduced in the banking sector.
In 2009, LDF Government of Kerala launched a NBFC named Al Barakah Financial Services along with a few NRI businessman based in the Gulf and KSIDC to work on Shariah principles after a feasibility report prepared by Ernst and Young. But Dr Subramanian Swamy filed a petition against this Shariah based NBFC stating that in a secular country like India , business activities based on religious principle line shariah and supervised by shariah board is against the secular ethos of the country and the tax payers money cannot be invested in such venture. After a prolong discussion & debate the kerala high court dismissed Dr Swamy’s petition that Shariah based business activity is not against the secular principles of the the Indian Constitution in Feb 2011.
Soon after the formation of the UDF Govt, the matter was pursued further and culminated in the formation of the newly named Cheraman Financial Services Ltd instead of Al Barakah Financial Services. Cheraman is the name of the Malabar king who embraced Islam after witnessing the miracle of Shaqqul Qamar.
In some of the media reports, it is wrongly stated that RBI has approved Islamic Banking which is not correct instead it is only a Non- Banking Financial Company which cannot accept public deposits and issue cheques to customers to withdraw cash.
Cheraman Financial Services has divided into three divisions in their activities – Leasing, infrastructure development and Fund Management. The Company has ten directors, a mix of well known personalities from different communities and backgrounds . Noted businessman and philanthropist Dr Mohamad Ali of Galfar Group is the Chairman and Padma Shri CK Menon is the Vice Chairman and APM Mohd Hanish IAS is the Managing Director.
Another significant development is the appointment of renowned , internationally acclaimed economist & financial expert Dr Raghuram G Rajan as the Governor of RBI after the retirement of Dr D Subbarao.
H Abdur Raqeeb , General Secretary , ICIF . Mr Abdul Rahman MP , LokSabha . Dr Raghuram Rajan – RBI Governor Designate and Mr Khurshid Najmi , Fmr Joint Legal Advisor to RBI during discussion
Now when he is at the helm of affairs as Governor of RBI , it is hoped that he would implement the recommendation of CFSR of introducing Islamic Finance products in the main banking sector.
A delegation from ICIF consisting Mr H Abdur Raqeeb ,General Secretary ,Mr Khushid Najmi, former joint legal advisor to Reserve Bank of India and Mr Abdul Rahman MP of Vellore constituency , Tamil Nadu met Dr Rajan in Dec 2012 at the Ministry in New Delhi who assured the delegation that he is committed to introduce the alternate system of Islamic Banking.
Mr K Rahman Khan, Union Minister of Minority Affairs had too discussed with Dr Rajan for the financial inclusion of Muslims and pleaded to accommodate Islamic Banking along with conventional banking.
Mr Wajahat Habibullah , Chairperson, National Minority commission urged the Prime Minister Dr Manmohan Singh and written to PMO to take up the implementation of Islamic Finance and Banking.
These efforts and more particularly Dr Raghuram Rajan ‘s appointment as RBI Governor, there seems to be a positive signal that very soon Islamic Financial products will be accommodated in the banking sector for the inclusive growth of the marginalized and the minorities as well as the infrastructure development of the country.