Nigeria inches closer to establishing Islamic banking model


The Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi’s initiative to establish an Islamic banking model in the country is getting closer to reality. To foreclose any doubt and capitulation to varied criticisms against the proposal, the apex bank‘s helmsman led a delegation from the CBN to the 16th Meeting of the Council of Islamic Financial Services Board in Khartoum, Sudan recently.

The meeting, the second attended by Nigeria since the CBN became a full member of the council in 2009, serves as a tonic for the regulator to reaffirm its commitment towards establishing the model of banking operated according to the dictates of Sharia law.

Sanusi, who has never hidden his passion for the non-interest banking paradigm, is of the opinion that the prevailing economic meltdown has increased the demand for Islamic financial products and services across the world.

His belief stems from the perception that while the recent economic meltdown lasted, Islamic institutions displayed strong resilience reflecting their conservative approach to business, balanced and ordered appetite for growth and focus on the basis of financial intermediation as opposed to innovation.

At the Khartoum gathering, Sanusi intimated the leadership of the Central Bank of Sudan of the ongoing efforts by the CBN to develop a regulatory and supervisory framework for non-interest banking and solicited the support and cooperation of the mainly Islamic country‘s banking regulator in that regard.

As expected, he got a positive response from the Advisor to the Governor of the CBS, Dr. Ahmad Ali Abdullah, who represented the Governor.

He was assured of the readiness of the banking regulatory authorities in Sudan to support the CBN in its implementation efforts through experience sharing and capacity building.

During the meeting, the council deliberated on several issues including strengthening of Islamic financial system and approved in principle to establish an inter-governmental special purpose entity to help in building liquidity management infrastructure at both domestic and international levels.

The CBN, in an e-mailed statement to our correspondent on Friday, said, ”Establishing the special purpose entity would be achieved by facilitating cross-border liquidity management among non-interest financial institutions through the acquisition and maintenance of global pool of sovereign assets.”

According to the council, such sovereign assets must be suitable for use as underlying asset on which it would benchmark the issuance of highly rated Islamic bonds to be traded globally.

Other areas which the council deliberated and agreed upon include the issue of capacity building among the operators and regulatory authorities with a view to strengthening their operations and ensuring efficient service delivery in the industry.

Sanusi believes that the global financial crisis exposed the deficiencies in the conventional banking system and damaged the confidence in the global governance system.

The CBN boss had said in an earlier gathering that he initiated actions to develop a regulatory and supervisory framework for Islamic banking in Nigeria in recognition of its benefits in a growing economy like Nigeria.

To realise the non-interest banking model, the CBN intends to deploy a number of strategies to address some of the identified challenges,

These include extensive capacity building through collaboration among the various stakeholders to develop cognate expertise in non-interest banking, development of an adequate regulatory and supervisory framework for the effective operation of non-interest banking in Nigeria, promotion of greater cooperation and coordination among relevant regulators and other stakeholders such as the Securities and Exchange Commission and the Nigerian Stock Exchange, the National Insurance Commission, the Nigeria Accounting Standards Board, among others.

source : the punch

First Islamic Microfinance Bank Launched in Lagos

The first Islamic micro finance bank in the country, Al-Barakah Micofinance Bank was yesterday commissioned in Lagos.

The bank is an initiative of The Muslim Congress which spans 16 years.

At a well attended event, the Chairman of Al-Barakah MicroFinance Bank, Dr.Abdul Hakeem Mobolaji said the bank is set up in response to the increasing demand for alternative micro credit products by the less privileged members of the society against the conventional banking practices.

He also said the bank would provide succour and financial service to the society in support of the Federal government’s drive to eliminate poverty in the country.

“What we are commissioning today represents our contribution towards providing an alternative banking for Muslims and non-muslims alike.

It is our fervent hope that more like-minded individuals and corporate body will embrace this window and deepen the financial market through provision of sophisticated Islamic instruments and finance”.

source : allafrica

Future of Islamic banking: Things can only get better

Several countries have started to place an emphasis on a consumer-friendly banking system that has evidently proven its ability to avoid the harsh effects of the global economic crisis.

Islamic banking created a shelter for these countries, though a small one, when their economies were hit by the worst economic depression in 80 years. Having proven its robustness, many pundits confidently claim today that Islamic finance has a bright future ahead with growing recognition all around the world. Badlisyah Abdul Ghani, the CEO of CIMB Islamic Bank Berhad, which was voted Best Overall Islamic Bank at the 2010 Islamic Finance News Awards, believes a bright future lies ahead for interest-free banking. Abdul Ghani says the outlook is very positive as Islamic banking is gaining prominence among customers, adding that with greater consumer awareness, the demand will likely grow in tandem. In Malaysia, Islamic finance already commands 20 percent of the total banking sector, 70-80 percent of the primary debt capital market, more than 60 percent of the total outstanding corporate bonds, 88 percent of the listed stock and 10 percent of the asset management industry. “The expectation is for these market shares to grow further in the next five years,” Abdul Ghani said. In fact, when it comes to Europe, the UK and France have already introduced Islamic finance into their financial system and the Kuveyt Türk Participation Bank is vying to gain a stronger footing in Germany with its interest-free banking applications. Jamzidi Khalid, CEO of Deutsche Bank AG International Islamic Banking and the head of Islamic Structuring for Asia ex-Japan, said in a bank press release dated March 1 that the bank hopes to increase its leading niche in the market. “Making our conventional product platform available to clients in a Shariah-compliant format greatly increases our competitive position, while contributing to the market’s broader development. This is particularly true of the Islamic bond market, where we hope to leverage our position as the number one arranger of conventional international bonds in Asia,” he said. Islamic banking banks are not confined to commercial and retail banking and have also tremendously expanded in asset management through Shariah-compliant fund management. According to an S&P report, assets of the top 500 Islamic banks expanded by 28.6 percent to total $822 billion in 2009, compared to $639 billion in 2008. Although Islamic finance survived the 2009 economic depression largely undamaged, it was not fully immune. The biggest Islamic banking market is held by Saudi Arabia. However, after the Middle East, Malaysia emerges as the leading nation in the Islamic banking system, due to its organization and long-term vision. Malaysia is recognized as Asia’s Islamic financial hub by PricewaterhouseCoopers. The firm concluded that as of the end of 2009, Malaysia’s Islamic banking assets equaled RM113.5 billion ($35.2 billion). In addition to that, according to a 2009 report by the Malaysia International Islamic Financial Center (MIFC), Malaysia had the largest “sukuk” — the Islamic equivalent to a bond — market in the world by 2007 with a total of $25 billion. Islamic banking has a similar rationale as conventional banking except that it operates in accordance with Shariah rules on transactions, forbidding interest as well as investment in businesses that provide goods or services considered haram, or contrary to Islamic principles. The obvious differences between Islamic banking in Malaysia and in the West are its products and services. For example, partly due to the fact that the majority of Malaysians are Muslims, Malaysia has more varied players, including Islamic banks, investment banks, insurance companies, development banks, savings institutions, fund management companies, stock brokerages and trusts. There is also a Pilgrims Management and Fund Board (Tabung Haji) to help people save for hajj, the pilgrimage to Mecca. There is little difference between Islamic banking in Malaysia and in the Middle East as Malaysia works closely and emphasizes strategic alliances through Islamic finance with emerging countries of the Middle East, Africa, Central Asia and Latin America, countries expected to experience the most rapid economic recovery. Malaysia has also taken several initiatives into account, including exempting a wide range of taxes across the Islamic finance spectrum, pioneering numerous global Islamic banking and finance initiatives, adopting a liberal foreign exchange regime and creating a comprehensive regulatory and supervisory framework to ensure transparency and accountability, all of which are important to its Muslim and non-Muslim constituents. Banks from all around the globe have taken an interest in Malaysia’s Islamic banking market, including Japan’s Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad (BTMU), Germany’s Deutsche Bank AG and Saudi Arabia’s Al Rajhi Bank. Abdul Ghani underlines that investors have been confident about investing in Islamic banking in Malaysia. “Malaysia is one of the most successful and mature Islamic financial markets in the world thanks to our focus on the robustness, integrity and stability of the market — due to an effective and facilitative legislative, regulatory, legal and Shariah framework. This approach helps build confidence in the industry,” he added. Islamic banking has its critics. Many doubt, for instance, that its principles and the products are attractive enough to interest non-Muslims. For that reason, therefore, conventional banking is also regarded as a significant part of the financial system in countries where Islamic banking takes place. There is also the issue of human resources and expertise scarcity in Islamic banking, which hinders the system’s global growth. In Malaysia, the International Shariah Research Academy (ISRA), the Islamic Banking and Finance Institute Malaysia (IBFIM), the International Center for Leadership in Finance (ICLlF) and the International Center of Education in Islamic Finance (INCEIF) were established to ensure a deep pool of talent and expertise to support Islamic financial development. Jordan’s central bank governor, Umayya Toukan, told Reuters in March that it is important for Islamic banking to be part of the global banking system, noting that it should not be isolated and that the international standards of financial systems such as accounting standards, regulations and capital adequacy requirements must be available for Islamic banking, too. To achieve this standardization, Malaysia has established prudential standard-setting bodies. The Islamic Financial Services Board (IFSB) and the Association of Islamic Banking Institutions Malaysia (AIBIM) have adopted two standardized agreements, which are the Interbank Murabahah Master Agreement (IMMA) and the Master Agency Agreement (MAA) for deposit-taking and placement transactions. Vatican suggests Islamic system as model for Western banks L’Osservatore Romano, the semi-official newspaper of the Holy See, reported during the global economic crisis that the Vatican favors Islamic financing and noted that banks should use Islamic finance as a model in their efforts to increase consumer confidence. The Vatican suggested that Western banks, which have been negatively affected by the global crisis, should look at rules governing Islamic finance to restore confidence among their clients.

source : todayzaman

Islamic finance unscathed but need for tighter rules

The syariah finance industry, which abides by religious laws that prohibit the payment and collection of interest, is worth an estimated US$800 to US$950 billion (US$1 = RM3.20) and expanding in the Muslim world and in the West.

Moody’s Investors Service said earlier this month that the sector has a market potential of US$5 trillion.

However, the global economic turmoil which felled some mainstream banking institutions, and Dubai’s financial fallout late last year, has highlighted the need for the industry to shore up areas where it may be on shaky ground.


Dubai stunned financial markets last November when it said it might need to freeze debt payments by its largest conglomerate Dubai World. Last month it announced a debt restructuring plan with a US$9.5 billion funds injection.

“What happened in Dubai is affecting both the conventional market and the Islamic market because the players in the market totally forgot proper risk management,” says Badlisyah Abdul Ghani, chief executive of CIMB Islamic, a pioneer Islamic bank in Malaysia.

“A lack of framework regulations are the single biggest threat to Islamic finance growth today,” he said at a recent conference on syariah finance held in Kuala Lumpur.

In Islamic finance, the customer and the institution share the risk of any investment and also divide any profits between them.

“There’s nothing wrong with the Syariah structure, it’s the law of the land and the regulatory framework that needs to be sorted out to ensure an Islamic financial transaction can be carried out effectively,” Badlisyah said.

source :

Plea to expedite interest-free Islamic banking

A joint delegation of Rajasthan Muslim Forum and the Indian Centre for Islamic Finance met Union Minister of State for Finance Namonarain Meena in New Delhi on Saturday to discuss with him the feasibility of interest-free Islamic banking in the country.

Experts in the delegation brought to Mr. Meena’s notice a recommendation of the Union Government’s Committee on Financial Sector Reforms, headed by Raghuram Rajan, for creation of a framework for interest-free banking. They said the new banking system would not only be viable for the coun-try but also beneficial for underprivileged sections of society.

The delegation’s members included Indian Centre for Islamic Finance general secretary H. Abdur Raqeeb and Jamat-e-Islami Hind Rajasthan president Mohammed Salim, who is also a member of the Rajasthan Muslim Forum.

The delegation pointed out that large sections of Muslim population in different States had kept themselves away from conventional banking because of their religious faith not allowing transactions involving interest. Their investments could benefit the national economy if interest-free banking was permitted in the country.

Mr. Salim said the noted agricultural scientist, M. S. Swaminathan, had recently observed that Islamic banking could be the solution to farmers’ suicide in Vidarbha. About 40 per cent customers of Islamic banking institutions in Malaysia and 20 per cent in Britain are non-Muslims.

Mr. Abdur Raqeeb submitted to the Union Minister the documents relating to methods and techniques adopted by modern and secular countries to create a level playing field for conventional and Islamic banking. “When London, Tokyo, Singapore and Hong Kong can become hubs of Islamic finance, why not Mumbai or Cochin?” he asked.

The delegation said in a statement that Mr. Meena assured of looking into the issue seriously and promised that he would hold detailed discussions with the officers of his department in this connection.

source : hindu

Indonesia eyes Islamic T-bills, retail sukuk in 2010

Indonesia may issue Islamic treasury bills and retail sukuk this year to diversify funding sources, develop the Islamic debt market and finance the state budget deficit, finance ministry officials said on Monday.

The ministry also said it expected to issue conventional bonds for retail investors in July or August, with maturities of up to five years.
Indonesia, the world’s most populous Muslim country, has been relatively slow to develop its Islamic markets, lagging Malaysia and Singapore. It stepped up its efforts last year by eliminating double taxation of such sharia products, as this had hampered growth of the industry.
The finance ministry currently issues conventional treasury bills, with maturities of up to 12 months — usually at least once a month via debt auctions — while Bank Indonesia (BI), the central bank, issues treasury bills called central bank certificates (SBIs) with a maximum maturity of six months.
“We are still in talks with BI including on the maturity” of the Islamic T-bills, Dahlan Siamat, the finance ministry director in charge of Islamic debt, told reporters.
“If it can be issued this year, that will be good,” said Rahmat Waluyanto, the ministry’s head of debt management unit, referring to Islamic T-bills.
The finance ministry’s decision to consider issuing Islamic treasury bills follows moves by the central bank to reduce the frequency of its SBI auctions as it tries to contain hot money flows, shift money into longer-dated paper and spur bank lending.
The central bank is in the process of changing its auction schedule. It will hold its SBI auctions once a fortnight, instead of once a week, until late May, and then once a month starting in June.
Central bank officials have said they expect to rely less on SBIs for monetary operations and instead use more finance ministry debt securities.
Ministry officials also said they expected to issue Islamic debt, or sukuk, for retail investors around November.
The ministry last sold sukuk to retail investors in February, raising 8 trillion rupiah ($888.3 million) in a three-year issue that yielded 8.7 percent — well above the one-year bank deposit rate of about 6.5 percent.
The finance ministry has said it plans to raise 176.2 trillion rupiah from bond issues this year, including both conventional and Islamic debt.
The proceeds would be used to finance the budget deficit, which under the approved budget is forecast at 1.6 percent of GDP this year, although under the revised budget it is forecast at 2.1 percent of GDP. ($1=9005 Rupiah)
source : guardian

Islamic finance bodies have trillion-dollar potential – Moody’s

ISLAMIC financial bodies, which adhere to religious proscriptions against interest, have a market potential of at least US$5 trillion ($5.43 trillion), Moody’s Investors Service said.

But Moody’s added that such institutions needed to develop their own derivative instruments, avoiding conventional derivative practices, if they wanted to retain their popularity among Moslem investors.

It said Islamic financial institutions had total assets in 2009, despite a gloomy international economic environment, of $US950 billion ($1.03 trillion).

But it estimated that the sector’s potential was “worth at least at least $US5.0 trillion ($5.43 trillion) and the industry is continuing to expand globally.”

Islamic banking has been left relatively unscathed by the global financial crisis, largely because of rules forbidding engagement in the kind of risky business that sank mainstream institutions like Lehman Brothers.

Islamic Shariah law bars the payment and collection of interest, which is seen as a form of gambling.

Islamic finance also operates on the principle of risk-sharing between the issuing bank and the buyer of a financial product, making it a less risky alternative to some conventional banking instruments.

Moody’s Vice President and Senior Credit Officer Anwar Hassoune said that Islamic financial bodies now wanted to use derivative instruments to hedge against risk and to improve monitoring practices.

“However they are keen to do so in a Sharia-compliant manner, rather than imitating conventional derivative instruments, in order to avoid losing their special status as Sharia-compliant banks, which makes them very attractive to a large population of Muslims.

“For this reason a new innovation phase in the industry is critical.”

source :

Islamic finance acceptability increasing

Dr Umer Chapra, a renowned international scholar on Islamic economics and finance, has said that there is a greater acceptability of Islamic finance in the world after the recent global financial crisis. Delivering a lecture on ‘Current Islamic Banking Paradigm and the Way Forward’ on Wednesday, he said that Islamic Finance is now more respected all over the world because of several economic crises created by the global financial system in the last four decades.

He said the recent financial turmoil was the most severe of all involving approximately $3 trillion to $4 trillion in bailout funds. He said that primary cause of the recent crisis was excessive and imprudent lending by banks, which happened because of inadequate market discipline and lack of regulation and supervision.

He gave a complete run down on how the international financial crisis evolved and highlighted salient features of the Islamic financial system, which could prevent occurrence of such a crisis in future. Dr Chapra said that risk-sharing and equitable allocation of credit are the hallmark of Islamic financial system based on Islamic principle of justice.

He said the Islamic financial system lays great emphasis on equity and profit and loss sharing which make banks more cautious in lending and added that in Islamic system debt is not created through direct lending and borrowing but rather through the sale and purchase of real goods and services.

He said the Islamic financial system puts several conditions on debt financing which, inter alia, include that the asset being sold or leased must be real and not notional or imaginary. Similarly, debt cannot be sold and the risk of default associated with it must be borne by the lender himself, which will motivate creditor to be more careful in lending, he added. He said the market discipline that Islam imposes puts a check on excessive expansion of debt.

Dr Chapra said that Islamic finance was still in its infancy stage but it had a lot of potential to grow. “Islamic financial system has showed the world why conventional system failed … and this system can save the international financial system,” he added. Earlier, State Bank of Pakistan Governor Salim Raza in his welcome address acknowledged the valuable contributions made by Dr Chapra in the field of Islamic economics and finance. staff report

source : dailytimes

Islamic banks can mitigate the economic crisis

Prohibition of interest in Islamic banking can alleviate economic crises and financial crash – assesses financial expert.  Interest Prohibition makes Islamic banks to become shareholders of the client’s business and it makes them more accountable when they lend money.

If we had several banks operating according to Sharia in the Muslim faith, the financial crisis would not be nearly as grim as it is today.  It assesses the British consultancy firm Jasper Capital, which specializes in Islamic finance.

 “Obviously we would have had the financial crisis in any case, but if there had been a more prudent lending policies, which are within the Sharia financing, so the crisis had been lower,” said Jack Stewart, who is chief consultant for the Jasper Capital and stationed in Abu Dhabi.

 According to Sharia, it is forbidden for Muslims to participate in financial transactions involving interest, but it does not prevent Muslims from doing business.  Over the past five years Sharia finance has grown wild in Europe, according to Financial Times, and it may have some benefits for both consumers and the economy as a whole.

 Sharing risk with the customer

 Although Islam prohibits interest, it is still allowed to earn money to lend money.  Before buying a home for the bank will buy the house for a client and let it over to a fixed price equivalent to the purchase price and profit.  When the house is paid off, transferred ownership to the customer.  Niels Mølgaard head of Amanah, the first financial institution in Scandinavia, operating only in accordance with Shari’a principles.  And according to Niels Mølgaard a sharia bank would never have invested in the uncertain mortgage receiving the housing bubble to burst in the U.S. and thus created the basis for the financial crisis.

 “Crash in the housing market in America came because they borrowed too much money to people who could not pay back, and it would not have happened in the same degree in sharia financing,” says Niels Mølgaard and explains:

 “In the pure system serves the banks money by shifting investments to where there is the greatest return.  When the bank lends money for a house purchase, founder customer promissory letter that the bank can sell more, and hence no longer liable for, but it can not in Shari’a, which the Bank is co-owner of the house until it is paid off.  Bank binds its manpower and money in that time period, a financing is set to, for example.  30 years.  And thus bears the risk of bank financing in conjunction with the customer, “says Niels Mølgaard.  And when the bank is bound to a solid agreement, it will also keep away from unsustainable investments that U.S. banks went on board in the housing bubble in the U.S..

 Housing Bubble and Financial Crisis

 Housing Crisis in the U.S. is a classic lesson in how wrong it can go when the banks too uncritically lend money to ordinary people that can not be transparent market mechanisms.  After repeated interest rate cuts, which made home buying relatively cheap, the banks issued a lot of high-risk for house buyers, which in reality could not afford, but which entered the market with the expectation that further interest rate reductions and increases in property value would enable them to pay the loans back.

 Value Increases came and cheered for additional borrowings in equity release to fund a growing family.  But eventually, the market was saturated, the value decreased in the housing market, the loans were more costly and coercive actions began to roll.  Part of the debt from the rotten housing deals were in the meantime been sold to European banks, which now sat in housing investment was no longer worth anything.

 Islamic banks are joint owners of the loans they give out and therefore can not run away from bad investments:

 “Islamic banks creates a more stable economic environment because they look very carefully for what the customer can pay back,” said Jack Stewart, who points out that small businesses can benefit from switching from the big banks to sharia banks.

Better advice

 Within the traditional banking among banks was not in the company’s business, but it makes the Islamic banks, because they bear a greater share of risk when they become joint owners of the company.  In return, they also share in company profits.

 “Islamic banks are tied to an investment, and therefore participate more in their clients’ business, because they both share the risk and profits, and it can be of great benefit to small businesses that do not have the same expertise that large companies with experienced trustees and investment managers hired, “says Jack Steward, who criticize the big banks to let small businesses in the lurch.

 “Small to medium-sized companies have always been at the mercy of large banks, both in the West and in developing countries, and are particularly vulnerable to bad investment advice,” says Stewart, Jack.

 London is the western mecca for Islamic finance and the English authorities could be the first in the West authorize the first Islamic bank, Islamic Bank of Britain, in 2004.

 Ethical investments

 The English authorities have amended legislation for banking regulation, since Islamic banks should be regulated in a different way.  Partly to serve the 1.8 million Muslims in Britain, but also to enable the UK-based banks to access the new surplus, rising oil prices have created in the big sharia banks in the Middle East.  The cash surplus in the Middle East has become very attractive to Western banks, which suffer from the financial crisis, but the Islamic banks are also attracting a different customer group.

 Non-Muslim customers with ethical requirements for investment banking also opens accounts in the Islamic Bank of Britain.  Besides the prohibition of interest is not permitted to invest in pig production, alcohol, porn, gambling and weapons, and has, according to Jack Stewart also been an engine for growth.

 “It is rather to the requirement that companies must demonstrate social responsibility like Corporate Social Responsibility, which has grown up as corporate ethics seal of approval in the West,” says Stewart, Jack and the Islamic Bank of Britain also aware of:

 “A lot of our customers are attracted by the ethical dimension, but also because we serve our customers in different languages.  Hindu, Urdu and Arabic is a fundamental service, “says Shah Abbas.

Source : informationdk(google trstld)


Court directive to State on Islamic banking firm

A Division Bench of the Kerala High Court on Thursday directed the State government and its instrumentalities to desist from participating in any way, financially or otherwise, in the business of a newly formed non-banking financial company, said to be based on Islamic laws, pending adjudication of the writ petitions challenging its formation.

The Bench of Chief Justice J. Chelameswar and Justice C.N. Ramachandran Nair passed the directive after hearing arguments on petitions filed by Al Barakh Financial Services Limited and the State government seeking to vacate an interim order.

The Bench had earlier directed the government and the Kerala State Industrial Development Corporation (KSIDC) to ensure that the newly formed company did not commence its operations until further orders from the court.

The interim order was passed on a writ petition filed by Janata Party president Subramanian Swamy against the government sanction given to the KSIDC to form such a company.

The Bench clarified that the interim order did not prohibit the company from carrying on its activities, provided such things were done in conformity with the law and after obtaining all clearances.

Dr. Swamy, opposing the pleas to vacate the interim order, submitted that there was no new development that warranted the lifting of the stay. He pointed out that the Union Finance Minister stated in the Lok Sabha on December 18, 2009 and March 5, 2010 that Islamic banking activities were not feasible in the current statutory and regulatory provisions.

RBI Deputy Governor Shyamala Gopinath had gone on record that the Islamic banking proposal had not come to the RBI because it was an issue between the Centre and the State. In fact, the RBI rejected such a proposal in 2007. The government and the KSIDC stated in their counter-affidavits that the company was RBI-compliant. He contended that the government order in this regard disclosed that it was an Islamic investment company. If the company was to function as per the Shariah laws, an amendment to the Banking Regulation Act would have to be made. The setting up of such a company with co-ownership of the state was ‘antithetical’ to equal treatment of all religions.


Dr. Swamy said that as per the government order, 11 per cent of the equity would be held by the KSIDC.

Counsel for the KSIDC submitted that the corporation had not yet made any investment in the company.

The government, in a counter-affidavit, refuted the allegation that the company would function in terms of the Shariah law.

The allegations were baseless and misleading. The company would function only in accordance with the RBI Act, rules and guidelines, it said.

source : hindu