Kerala Finance Minister K M Mani reveals plans for special counters to be opened in state treasuries to collect interest-free deposits, saying the state Government was ‘not against’ the idea of Islamic banking
Despite Kerala’s apparent willingness to embrace Islamic finance, the Reserve Bank of India and the central Government has made it clear that Islamic banking may not be implemented under current legislation. The state legislature is, therefore, moving ahead with opening special counters in the state treasuries. Industries Minister P K Kunhalikutty said that the deposits mobilised would be invested in productive sectors. The returns made from such investments will be shared among the stakeholders.
Earlier in July, Kerala Chief Minister Oommen Chandy has offered full support to interest-free banking system based on the Islamic principles. “The Kerala government will extend full support and cooperation to the interest-free banking system so that it may be used for the development of the state and we will try to attain the central government’s approval for it”, he said while inaugurating a national seminar on Interest-free Institutional Mechanism for Banking, Finance and Insurance held in Thiruvananthapuram on 4 July 2011.“Islamic banking is not a dangerous suggestion. The government would clarify doubts and go forward,” he added. The seminar was organised jointly by the Department of Islamic Studies in the University of Kerala, the Thiruvananthapuram Chamber of Commerce, the Indian Centre for Islamic Finance, the Indian Association for Islamic Economics, Al Barakah Financial Services Limited, Sequra Investment and Management India Private Ltd, Ecotech Builders and the Alternative Investments and Credits Ltd.