Govt. urged to allow financial bodies to adopt Islamic practices

New Delhi: The International conference on “Prospects for Islamic Venture Capital Funds in India” concluded here on Sunday with an appeal to the Government of India to take necessary steps to allow various financial institutions to adopt Islamic products and practices so as to lay foundations of a level playing field in economics and finance in which all players may take part in a fair and just manner.

The two-day International conference was jointly organized by the Institute of Objective Studies, (IOS), New Delhi and Indo-Arab Economic Cooperation Forum, in Parliament House Annexe on May 14 & 15 May. Dr. Rudy Yaksick, Partner, Concord Capital Partners LLC, from USA and Khaled M. Al-Aboodi, CEO & General Manager of Islamic Corporation for the Development of the Private Sector (ICD), Jeddah; Mr. Nabil El-Alami, Corporate Marketing & Communication Manager, ICD, Jeddah, KSA were among the foreign participants in the conference.

The above appeal was part of the nine-point resolution which was adopted by voice vote at the valedictory function of the conference. The function was chaired by Dr. Mohammad Manzoor Alam, Chairman IOS while the valedictory address was delivered by Mr. G. Ramaswamy, President Institute of Chartered Accountants of India, (ICAI), New Delhi. Prof. Naushad Ali Azad, former Dean of Social Sciences, Jamia Millia Islamia, New Delhi read out the resolutions. During the two-day deliberations, a number of Islamic financial experts and academics from India and abroad highlighted the finer points of the Islamic system and its utility and viability. Dr. Tahir Beg, convener of the conference, proposed vote of thanks.

The other resolutions adopted at the conference were as follows:-

(i) This conference noted with satisfaction the current progress of Islamic banking in theory and practice. It was gratified to note that many countries in Western hemisphere have taken necessary steps in this connection. to allow various financial institutions to adopt Islamic product and practices. However, it hoped that Islamic finance would be able to deliver the goods in India too;


(ii) The conference appealed to the community institutions and community leaders to nurture and develop the entrepreneurial traditions;


(iii) The conference resolved that government of India should take necessary steps to liberalize the conditions for the establishment of Venture capital funds, lowering the required threshold limits for them. The conference hoped that such a step would lead to establishment of such funds and provide more funds for small and micro enterprises;


(iv) The conference appealed to the regulators, business corporations, investors and all others concerned to make use of venture capital funds. The conference underscored the role of venture capital funds to provide for the financial needs of new firms which have a vital role in promoting productive capacity, investment, income, employment and entrepreneurship in the economy. The promotion of Islamic venture capital funds may attract more investment to this country and may direct investment towards desired directions;


(v) The conference requested the government of India to direct financial regulators such as RBI, SEBI. IRDA, NABARD etc to establish a special fund to promote financial literacy in the country, particularly in the rural areas and for the benefit of economically weaker sections of Indian population including the scheduled castes, scheduled tribes and minorities;


(vi) The conference welcomed the initiative of establishing incubation centers at some national educational institutions. However, the conference reiterated the role of minority institutions in this regard and demanded the government that such institutions like Aligarh Muslim University, the Jamia Millia Islamia of New Delhi and the Jamia Hamdard be given priority in establishing such centers and in giving financial, technical and other support to them;


(vii) The conference suggested that institutions like Waqf Boards, Hajj Committee of India, and Minority Finance Corporations etc may be allowed to invest their surplus funds in the development of Indian economy in such a manner that does not contravene the religious sensibilities and


(viii) The conference also suggested that venture capital and mutual funds must refrain from investing in such instruments that yield interest income. However, these financial institutions must be encouraged to invest in the equities of government owned companies. These institutions may also be allowed to raise interest free deposits from the general public.

Meanwhile, Ramaswamy, in his valedictory address said that it has been recognized that China and India are fastest growing economies in the world. With fast growing economy the prospects of investment with innovation in India has increased manifold. As such India needs to focus on the Islamic Venture Capital Fund, (IVCF), as it has huge potential to boost the economic growth further. This is possible only through education which would give a fillip to innovation, he emphasized.

He said that Islamic finance is a reality for which a separate set up is required. It is an eye opener for ICAI which gives new thought and idea in the field of financing. It is very important for entrepreneurs in India. The IVCF can be channelized by innovating and research. “In this competitive era you have to innovate or perish”, he remarked.

While assuring full cooperation to IOS from his ICAI, Ramaswamy called for joint efforts to present specific proposals of Islamic finance to the Government of India in order to get its approval.

While Dr. Mohammad Manzoor Alam, IOS chairman, in his presidential speech said that India has largest number of youth in the age group of 15-35 years which is about 60 per cent. It is a good omen. He called upon the youth who were present on the occasion in good numbers to take a lead in Islamic finance for the benefit of the Muslim Ummah and the country at large. He said that IVCF is a viable option to interest-based banking system and is not for Muslims alone but for the whole humanity which is groaning under the conventional banking system.

Dr. Manzoor emphatically said that his commitment is to see that in a global changing scenario Islamic banking system saves humanity from exploitations. He said that IOS would play its important role and try to implement the suggestions made in the conference. He announced to hold a workshop on Islamic finance wherein experts in the field would be invited. Thereafter, a consultative committee will be constituted to study in depth Islamic finance and IVCF along with Reserve Bank of India regulations and come up with suggestions, he declared.

Meanwhile, before the valedictory function two sessions of panel discussion were held on the second day. The theme of the third panel discussion was “Venture Capital Funds in Islamic Perspective (II)”. It was chaired by Mr. M. H. Khatkhatay, Founder, TASIS, Mumbai. The panelists were Dr. Rudy Yaksick, Partner, Concord Capital Partners LLC, USA; Mr. Imtaiyaz-ur-Rahman, President and Chief Financial Officer, UTI Asset Management Co. Pvt. Ltd., Mumbai; Mr. Faiyaz Ahmad Lone, Research scholar in Department of Commerce at Aligarh Muslim University; and Mr. Shadab Mobin, former Consultant, National Entrepreneurship Network, New Delhi.

While the fourth panel discussion was on the theme of “Prospects for Islamic Venture Capital Funds in India”. Mr. Imtaiyaz-ur-Rahman, President and Chief Financial Officer, UTI Asset Management Co. Pvt. Ltd., Mumbai, chaired the discussion. The panelists were Dr. Tahir Beg, Chairman, Institute of Islamic Economics & Development Studies, Bareilly; Dr. Shariq Nisar, Director (Research and Operations), TASIS, Bangalore; and Dr. A. Mohammed Ajmal, CEO Wealthcity, Chennai.

In all 17 personalities which included intellectuals, experts and journalists were felicitated with IOS awards during the two-day conference. Those who were honoured included: Mr. Nabil El-Alami, Corporate Marketing & Communication Manager, ICD, Jeddah, KSA; Mr. D. R. Mehta, former Chairman, SEBI and Dy. Chairman, RBI, Jaipur; Adv. Pravin H. Parekh, president Supreme Court Bar Association of India, Dr. Ashok Haldia, Director, PTC India Ltd., Dr. Tahir Beg, Chairman, Institute of Islamic Economics & Development Studies, Bareilly; Dr. Ausaf Ahmad, Former Head, Special Assignment, IDB, Jeddah, & Finance Secretary, IOS; Mr. G. Ramaswamy, President Institute of Chartered Accountants of India, (ICAI), New Delhi; Educationist Mr. Syed Hamid, Chancellor Hamdard University, New Delhi; Mr. Ravi Kishore, Secretary General, Indo-Arab Economic Cooperation Forum, New Delhi; Prof. Rifaquat Ali, former Professor of History, Jamia Millia, New Delhi, senior journalist Zia-ul-Huq etc.

It may be stated here that at the inaugural function of the International conference Khaled M. Al-Aboodi, CEO & General Manager of Islamic Corporation for the Development of the Private Sector (ICD), Jeddah had said: “In order to create a comprehensive and robust financial system, Islamic financial institutions need to be innovative and focus on developing Venture Capital, (VC) private equity and alternative investments. This will create an industry with a niche that is capable of competing with conventional banks, with the added value of shared wealth for the society. It is hoped that Islamic VCs will play a major role in developing Muslim countries”.

Al-Aboodi said the beauty of Islamic Finance is that it is a constitutionally developing and evolving industry, with new and innovative financial instruments and hybrid products being developed to fit particular business models, industries and countries, creating an edge over conventional products.

Mr. K. Rahman Khan, Deputy Chairman, Rajya Sabha who chaired the inaugural session in his presidential speech, while emphasizing the advantages of Islamic banking, said that it has originated from the Holy Qur’an which is not religious book of Muslims alone but for the whole humanity as it is a book of guidance for one and all.

Mr. Khan said that in every economic transaction four things should be kept in mind viz. (i) justice, (ii) equilibrium, (iii) truth and (iv) fairness. Any transactions which complies with these four principles as enunciated by the Holy Qur’an then it will ensure well being, peace and harmony among the people which is the hallmark of a good society. The Holy Qur’an has stated that none should be exploited and Islamic banking takes care of this. However, the conventional banking system fails to grow and assist the poor who are thus exploited at the cost of the rich people in society, he added.

Mr. D. R. Mehta, former Chairman, SEBI and Dy. Chairman, RBI, Jaipur, while delivering inaugural address said that if India has to progress then Islamic Venture Capital Funds, (IVCFs), has to be launched in the country as Malaysia and other countries are successfully experimenting with it. India is a multi-religious country and the prospects and the prospects for IVCFs in the country are very bright and as such it should be developed for different sections of society, he added.

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