Another hurdle to Islamic Finance in Indiazulkiflihasan
Court stays Kerala’s Islamic banking plans
Available at: http://economictimes.indiatimes.com/news/politics/nation/Court-stays-Keralas-Islamic-banking-plans/articleshow/5414884.cms
KOCHI | NEW DELHI: A division bench of the Kerala High Court on Tuesday stayed all further move by the state-owned Kerala State Industrial Development Corporation (KSIDC) to set up an Islamic bank in the state. The division bench gave its orders on a petition filed by former central minister Subramanian Swamy, who maintained that the proposed bank was against India’s secular credentials and its banking norms. The court accepted the petition and issued notices to the Union government and KSIDC.
The Kerala government gave the green signal to the project after a feasibility study found that an Islamic bank was a viable proposition in Kerala, following which a company was registered to take the process forward. Kerala’s finance minister Thomas Issac had recently told the state assembly that the share capital of the bank had been fixed at Rs 1,000 crore.
According to the proposal, the bank will not pay any interest to customers, while a Sharia board would decide what sort of investments it would make. The proposed bank would have Sharia-compliant banking products and profits made out of the investments would be distributed to the shareholders. Muslims comprise 24% of the state’s 3.2-crore population.
In his PIL, Mr Swamy had contended that public money was being appropriated for favouring a particular religion in a secular country, as KSIDC has 11% stake in the multi-crore bank. “The government’s participation is clear instance of state favouring a particular religion. This is violative of Article 14 and 25 of Constitution which promises equality before law and right to freedom of religion. Besides, Islamic Bank is violative of Banking Regulation Act of 1949. A 7-judge bench of the SC had ordered that no public money should be used for promoting institutions of a particular religion,” the PIL contended.
“The whole history of the world is summed up in the fact that, when nations are strong, they are not always just, and when they wish to be just, they are no longer strong.” Winston Churchill
University of Glasgow, Scotland.