The ethical investor

On Mumbai’s bustling Cadell Road you could walk past the office of Taqwaa Advisory and Shariah Investment Solutions (P) Ltd (Tasis) without noticing it. A low-key signboard in a row of other businesses, typical of old-fashioned office blocks all over the island city, is all that announces their existence.

It’s a far cry from the behemoth of Dalal Street, but Tasis’ subdued presence belies the significance of its recent collaboration with the Bombay Stock Exchange (BSE). In December, they launched the BSE TASIS Shariah 50 Index, which lists the largest Shariah-compliant stocks within the BSE 500.

It isn’t the first such index in the country. The National Stock Exchange already compiles a list of Shariah-compliant stocks. But it is the first that is based on the stipulations of a wholly India-based Shariah board. The architects of the BSE Shariah 50 are counting on a new wave of attention that they hope will transform the landscape for observant Muslims, as well as investors concerned with social responsibility.

“The notion of Shariah compliance has been around for 1,400 years,” says Jamil Ahmed Shaikh, director of Tasis. “In India, you could date the practice of Islamic banking to the late 1970s when small groups of Muslims in north India and in Mumbai started cooperative societies and chit funds.” But the effects were marginal, he says, and remained so until recently. “Over the last decade, people started to look at it as a way of alternate finance, and there’s more enthusiasm than ever after the subprime crisis (of 2008).” He smiles, “Once you get stuck in one area, you start to look for others.” Continue reading

JanSeva Chennai Branch Launched – Interest Free Credit Society – Loans

Jan Seva Chennai branch was launched at a gala function in Preston International College building in Chennai on  22-1-11.

Jan Seva

Jan Seva

Jan Seva ( ) a Cooperative Credit Society Ltd registered with Govt of India under Multi State Cooperative Societies Act 2002 has been functioning successfully in other parts of India including Mumbai and Vaniyambadi.

Jan Seva takes inspiration from economic guidelines given by Quran and Sunnah, and practices a interest free model, where risk and reward are both shared by donor and also the acceptor who in essence are also cooperative society members.

The launch function was well attended by the elite of the muslim community including businessmen, muslims organizations, financial providers like WealthCity etc. Arrangement was also made for muslim women.

After the opening qirat by Sheik Omar Khan Madani, brother S.Ahmed Meeran, owner Professionl Couriers gave the welcome speech introducing all the speakers, where he stressed the need for interest free economic model keeping in view the explicit warning seem in Quran and Sunnah for those who deal in Riba or Interest. Brother Ahmed Meeran is also the one of the Directors of Jan Seva and president of local Chennai branch.

His introduction was followed by Dr.Rahamatullah, Chairman, JanSeva speech where he detailed how JanSeva function and activities it is involved into. He highlighted the fact that 77% of Indian population has no access to organized financial system, and also reminded the spate of suicides linked with micro finance institutions recently, where organizations have taken advantage of this lacuna to exploit the poor and the needy with exorbitant interest rates.

He also clearly stressed that this Janseva service is open to all Indian irrespective of religion o caste or creed and also that JanSeva is not a Charitable organization but a Social Business on self sustaining model based on profit/loss and ethics.

He explained in detail how risk management strategies adopted by big banks and rbi are in a smaller scale adopted by JanSeva, so that members can have professional management and how janseva works as a micro bank itself on its own. JanSeva also provides both secured and unsecured loans to its members ranging from 2000 to 51 lakhs he pointed out and as laid out in their info flyer.

He was followed by Brother Dr.Jawahirullah President TMMK, who spoke eloquently and highlighted the need for these kinds of initiatives to be taken for the economic upliftment of muslim community.

Later H Abdur Raqeeb, Secretary, Indian Center for Islamic Finance, highlighted the need to bring in Islamic Finance and Banking in India. He pointed out that in almost all major countries Islamic Banking is operational and govt have legalized it and in countries like Malaysia about 40% of depositors are non muslims, hightiting the fact that Islamic Banking will be beneficial to all.

He also detailed the meets he had with Finance Minister Pranab Mukarjee, Salman Khursid, RBI personals etc and other muslims leader to take up the cause of Islamic Banking forward.

The chief Guest of the function Mr.Macca Rafeeb of Farida group, President South India FICCI,( who has also been awarded Padma Shri) stressed the need for muslims to take initiatives on their own and not get isolated from the main stream. He pointed out that during apartheid many black had left educating their children etc and due to the consequence of it even today they are a generation behind the other communities. He pointed out the muslims in south Africa had educated their children gotten involved in financial activities etc and in almost all major business courses commercial establishments we can see Indian in South Africa occupying high positions.

He stressed the need to take example from it and for muslims to form self help group, NGO or credit societies for financial upliftment of the muslims.

A brief question and answer session followed and vote of thanks given by Jiffery Qasim who is the Treasurer of the Chennai branch of JanSeva.

A call was also made to all Muslims to join as members and invest through JanSeva buying shares etc so that the poor and the needy can be benefited.

Even though it was a small initiative it hold the platform and potential for larger interest free financial institutions of the betterment of muslims community and other at large.


WealthCity / MuslimVoice


Bombay Stock Exchange launches Islamic index

The Bombay Stock Exchange (BSE) in the Indian city of Mumbai has launched a new index which consists of companies that meet the Islamic legal code.

The Tasis Shariah 50 was formed using guidelines from an Indian Shariah advisory board.

Studies have found that most Muslims in India are excluded from the country’s formal financial sector.

That is because Islamic law does not allow investment in companies that sell goods like alcohol, tobacco or weapons.

Neither does it allow investment in companies that derive significant profit from interest.

The index is intended to be the basis for other Shariah-compliant financial products.

Backers say that the index would "unlock the potential for Sharia investments in India".

Continue reading

Mideast gears up for Islamic Finance 2.0

Although operating on a lower risk profile due to restrictions on hedge funds, short-selling and high yield products, Islamic banks still faced challenges last year in manufacturing, distribution and IT governance. However, recent developments have helped boost optimism that the Islamic finance boom in the last decade was not a one-off.

Although the Islamic finance industry amounted to $1tr globally in 2010, it has too often been measured in relation to volumes of Islamic bonds outstanding, the number of standalone banks worldwide, or the size of the Islamic funds industry. Indeed, one of the many fallouts of the global financial crisis is that investors have grown more cautious when analyzing the performance of this fast-growing industry.

Like the aviation sector, Islamic finance has always been complex and costly. Islamic financial solutions have to abide to the guidelines of Sharia law and must be monitored for life by auditors and the boards of Sharia scholars.

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Malaysia should be ready for challenges in Islamic finance

KUALA LUMPUR: Malaysia has all the ingredients to be a success story in Islamic finance but it will not come by itself, according to Prof Volker Nienhaus.

He advised the country to prepare itself for the second phase of competition with the new entrant of Islamic finance markets such as South Korea and Thailand.

“One has to identify and take it as a challenge and not to compete with the first phase of South Korean or Thai initiative but prepare for the second phase. Let them prepare the market but be prepared for the second phase,” Nienhaus told StarBiz in an interview. Nienhaus is a visiting scholar under the Securities Commission (SC)-Universiti Malaya (UM) Visiting Scholar Programme. Continue reading

Faith-based investment gets on to fast track

The Bombay Stock Exchange’s launch of a Shariah-compliant index late last year, close on the heels of National Stock Exchange’s S&P Shariah index in 2009, has provided a jump-start to Shariah-compliant investments in India.

This will not only open doors for domestic and foreign investors to buy stocks in line with Shariah principles, but also enable fund houses to dabble more in Shariah-compliant exchange-traded funds and mutual funds. With India home to the third-largest Muslim population in the world (175 million Muslims as per the Sachar Committee report), and almost 50% of its population out of the formal financial sector, the opportunity is sizeable.

Globally, Shariah investments is a $1.2-trillion segment including banking, equity investments, mutual funds and insurance, growing at an annual rate of 20-30%.

Mohammed Ziaur Rehman, MD, Toss Financial Services, whose subsidiary TASIS developed BSE’s Shariah Index, feels the BSE Index has given tremendous mileage and publicity to Shariah-compliant investments and would be a game-changer. “BSE is a name of repute, so if BSE has launched a Shariah index, we will see more people investing in Shariah-compliant products and more fund houses getting in the space, which will further fuel growth in this segment,” he says. Continue reading

Ulema announce Shariah standards for investment in stock market

Mumbai: Ulema and clerics have given their nod, with some conditions, to investment in stock market, saying share trading is closer to Shariah than the present banking and insurance system. The Islamic Investment and Finance Board (IIFB), which has Maulana Wali Rahmani and Maulana Khalid Saifullah Rahmani as Members among others, have come up with Shariah standards for investment in stock market.

IIFB members met in Mumbai recently and discussed in details the share trading and investment in stock market in the light of Shariah. The meeting was attended by Maulana Wali Rahmani, Sajjada Nasheen, Khanqah Munger, Maulana Khalid Saifullah Rahmani, General Secretary, Islamic Fiqh Academy, Mufti Fuzailur Rahman Usmani, Mufti Shoaibullah Khan, Mufti Mohd Yahya Qasmi, Mufti Anwarul Haq Qasmi and Maulana Obaidullah Neyaz Qasmi.

Giving details about the Shariah standards formulated by the Ulema and members of IIFB, Imtiaz Merchant, Founder of Pragmatic Wealth Management Pvt. Ltd., told media in Mumbai on 18th Jan. 2011 that the Ulema while admitting there are some unpleasant aspects of stock market in the eye of Shariah, they concluded it is closer to Shariah than banking and insurance industry.

IIFB, according to Imtiaz Merchant, felt purchase and sale of shares is the modern form of Shirkat which is allowed by Shariah, so compared to banking system and insurance system, share trading is closer to Shariah. With some conditions, therefore, investment in stock market can be done, though it can’t be said that even following the conditions, share trading will be completely Shariah compliant. But compared to other forms of investment, this is better and has less evils, said Merchant adding that as Muslims are not in position to run their own economic system, this can be adopted. Continue reading

Islamic finance gets a boost from SGF

Islamic financial institutions (IFIs) that are authorized by Bank Negara Malaysia (BNM), the central bank, and the Securities Commission Malaysia, the securities regulator, and have been operating in the country have six months to comply with all requirements of the new Shariah governance framework (SGF) for Islamic financial institutions which was introduced by Malaysia late last year and which became effective on Jan. 1.

According to Bank Negara, by the end of June 2011 each IFI authorized and operating in Malaysia is required to confirm the status of compliance with the framework, which was adopted pursuant to section 59 of the Central Bank of Malaysia Act 2009, section 53A of the Islamic Banking Act (IBA), section 69 of the Takaful Act (TA), section 126 of the Banking & Financial Institutions Act (BAFIA) and section 126 of the Development Finance Institutions Act (DFIA).

The SGF is the most comprehensive and unique legislation and guideline in the world, setting out the Shariah governance process for the Malaysian Islamic finance industry. It also supersedes the guidelines on the governance of Shariah committees of IFIs introduced by Bank Negara in 2004 and which outlined the role, duties and responsibilities of the Shariah committee and its members and the relationship and working arrangement between the Shariah committee at individual institutions and the BNM’s Shariah Advisory Council (SAC) at the national level. Continue reading

In 2011, shall we see the emergence of Islamic Banking?

Recent reports have indicated that the central bank will soon move to regulate an Islamic commercial bank. What exactly is involved in Islamic banking?

Globally, the assets of Islamic banks have been expanding at double-digit rates for a decade and Islamic banking is increasingly becoming a visible alternative to conventional banks in Islamic countries and countries with many muslims.
Islamic banks serve muslim customers, but are not religious institutions. They are profit-maximising intermediaries between savers and investors and offer custodial and other traditional banking services. The constraints they face are, however, different and are based on Shariah law. There are four main features that differentiate Islamic banking from the conventional banks.

Prohibition against interest (Riba) is the major difference between Islamic and traditional banking. Islam prohibits Riba on the grounds that interest is a form of exploitation and is inconsistent with the notion of fairness. This implies that fixing in advance a positive return on a loan as a reward for the use of one’s money is not allowed.

Prohibition against games of chance (Maysir) and chance (gharar): Islamic banking bars speculation – increasing wealth by chance rather than productive effort. Maysir refers to avoidable uncertainty; for example, gambling at a casino. An example of gharar is undertaking a business venture without sufficient information. Continue reading

Islamization of indices

Islamic finance will serve its purpose better if is propagated as a bouquet of products rather than as a category of banking.

Even as the Reserve Bank of India (RBI) and the finance ministry stand resolutely against the introduction of Islamic banking, market participants are trying to get a slice of the $1 trillion global Islamic finance pie. Last week, the Bombay Stock Exchange launched a shariah-compliant index that will “allow domestic and foreign investors to buy stocks in line with the investment guidelines derived from the shariah”.

The BSE TASIS Shariah 50 index follows the rival National Stock Exchange shariah index, which is linked to the Standard and Poor’s shariah-compliant index. In 1999, Dow Jones became the first to start an Islamic index, as a subset of the Dow Jones Global Index. Continue reading