Kerala to support Islamic banking venture

February 4th, 2011 - 10:11 pm ICT by IANS  

Thiruvananthapuram, Feb 4 (IANS) Kerala Finance Minister Thomas Issac Friday expressed happiness over a court verdict giving the green signal to Al Barakah Company to start an institution on Islamic banking principles.The company has planned the venture along with the Kerala State Industrial Development Corp (KSIDC) as an investor.

“This is a welcome judgment and the KSIDC will now start work on the required sanctions,” said Isaac.

The KSIDC took the initiative to incorporate the public limited company (Al Barakah Financial Services Ltd) with an authorised share capital of Rs.1,000 Crores.

This would be a non-banking financial company, for which the permission of the Reserve Bank of India is required.

The Kerala High Court Thursday gave the green signal to Al Barakah, a company registered under the tenets of Sharia, to operate a financial institution based on the principles of Islamic banking.

Al Barakah will not operate as a bank and extend loans but make direct investments into such projects, after which profits would be shared in the form of dividends and not as interest.

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