Thiruvananthapuram: The interest-free financial institution Al Baraka will be made operational in the state, said Kerala Finance Minister TM Thomas Isaac yesterday while presenting the state Budget. He added that the institution would play an important part in the infrastructure development of the state, once it becomes operational.
The Minister said that the Al Baraka would fund the new road development scheme introduced in the budget. The government will allow a fixed percentage as service charge for the construction works carried out by the Road Fund Board and the Roads and Bridges Corporation. A share of the profit in this could be given to the Al Baraka. There are some practical difficulties for the functioning of interest-free institutions such as ‘double taxation’. An expert committee will be appointed to study it, the minister added.
Meanwhile, the Alternative Investments and Credit Limited welcomed the High Court judgement which upheld the Kerala government’s decision to invest in the interest-free finance institution Al Baraka. The judgement, which underlines the uniqueness of the Indian secularism, upholds the right of a community to carry out its economic activity as per its faith and the right of the government to introduce managing guidelines, said A Muhammedali (chairman of AICL). The meeting of the board of directors of the AICL congratulated Industries Minister Elamaram Kareem, Industries Principal Secretary T Balakrishnan, Al Baraka chairman Gulfar Muhammedali and general secretary of the Indian Centre for Islamic Finance Mr H Abduraqeeb for taking interest in the case. (The AICL is a non-banking financial institution working on Islamic finance theories and based in Kozhikode.)
The Al Baraka Financial Services is an interest-free financial institution promoted by the state government’s Kerala State Industries Development Corporation. Though the idea of such an institution came up from the idea of a Shariah-compliant Islamic bank, the Al Baraka aims to function as a non-banking institution as the Reserve Bank has not yet permitted the functioning of an Islamic bank in the country. The Kerala government decision to invest in the institution was questioned in the Kerala High Court. The High Court recently ruled in favour of the government. The government plans to attract investment from the large number of non-resident Keralites, who are hesitant to invest their money in other ventures out of fear of the involvement of interest.