Kerala: The concept of Islamic Banking has once again found a place in the Kerala economy in India, The New Indian Express newspaper reported.
In the revised State Budget presented on Friday, Kerala Finance Minister Thomas Isaac granted Cheraman Financial Services Ltd (CFSL) the Rs 250-crore modernization of the Kerala State Drugs and Pharmaceuticals (KSDP).
To mobilize fund for the project, the share capital base of Cheraman Finance will be widened. Upon completion of the modernization work, the factory will be leased out to the industries department, and the lease amount will be given as returns to shareholders.
The Finance Minister also announced that if the experiment proved successful, it would be replicated for the other projects. Interestingly, no time frame has been fixed for completion of the project.
Cheraman Financial, currently a loss-making entity, recorded a loss of Rs 88.74 crore in the 2014-15 financial year. The consolidated loss of the company after tax was Rs 1.75 crore in the financial year, as against Rs 2.26 crore in 2013-14.
“We are operating in compliance with RBI guidelines. Mainly it is a channel to attract funds from NRKs who are not interested in investing their hard-earned money in conventional banks. The fund will be utilized for infrastructure-development projects,” said CFSL managing director A P M Mohammad Hanish.
The company cannot claim to be an Islamic Bank as the present RBI guidelines do not allow one.
Mohammed Ali, former Chairman of Alternative Investments and Credits Ltd, an Islamic banking service firm, said the concept of Thomas Isaac could be successful.
“Cheraman currently operates on the lease-model in the healthcare sector. It is for the first time Cheraman is being offered a mega project. If support is ensured from all quarters, it could be a game-changing model” he added.