Kerala HC says no state stake in Shariah fund

In an interim order,Kerala High Court on Thursday ordered that neither the state government nor its industrial investment agency Kerala State Industrial Development Corporation (KSIDC) should co-operative with the proposed Shariah-based Venture capital fund.

The court was acting on a public interest litigation filed by former Union minister Subramaniam Swamy in early this January. The petitioner pointed out that such an Islamic financial entity was against the tenets of secularism. Earlier,the division bench had issued notices to the RBI,Finance Ministry and the KSIDC,which has 11 per cent stake in the venture fund registered as Al-Barka Financial Services.

The logic behind the move,initiated by the KSIDC,was to open an investment avenue mainly for Muslim entrepreneurs who were reportedly averse to an interest-based system. The CPM,which handles the finance and the industry portfolios in the government,had envisaged to raise initially Rs 100 crore from major Gulf-based business groups. The Islamic VCF had been designed as a route to private-public participation in Kerala. Interestingly,even non-Muslim businessmen too had evinced interest in the Islamic banking activity.