Thursday, June 14, 2007

Sukuk, Islamic investing in India & Singapore training center for Islamic bankers

There are now $8 billion of sukuk listed on the Dubai International Financial Exchange (DIFX). Total global sukuk issuance this year could be $50 billion, more than twice the $20 billion in 2006.

Islamic investors from the Gulf countries are now beginning to look for investments in India

Singapore Polytechnic will set up a training center to train new Islamic bankers.

5 comments:

Mohammed said...

India has over 150 million Muslims - an enormous market by any standards; but
are the new Shariah-compliant India funds targeted at these Muslims or the
overseas investors from GCC and elsewhere?

There is hardly any Islamic finance in India that addresses the needs of its
poor Muslims. It is easy to make a splash in the media by talking about an
Islamic Index for India. Indeed some early members of this forum would recall
that the Parsoli Islamic Equity Index that has recently been re-introduced
originally appeared in the year 2000 and was being compiled on a daily basis by
IBF Net under the name Parsoli-IBF Equity Index. A socially responsible fund
marketed as the first Islamic fund by the well-known House of Tatas was also
very much in the news around the same time. But like all poorly-researched
products, these turned out to be also-rans and disappeared from the radar screen
of Islamic finance over the next couple of years. Why? A little bit of research
would perhaps help in finding the answer. Indian Muslims are so poor that they
cannot even be seen as bank clients as depositors or borrowers. A recent study
commissioned by the Ministry of Minorities Affairs of Government of India puts
the percentage of Indian Muslims who have an account with a bank at around 20
percent!!

Is it that Indian Muslims abhor interest and therefore, have shied away from
dealing with the banking sector? Or is it that Indian Muslims are too poor to be
bankable? A recent study by the Delhi-based NGO Nirantar has concluded that poor
Indian Muslims do not benefit in any way from the massive SHG-Bank Linkage model
run by Indian commercial banks.

At this critical juncture, should we feel elated to hear about Shariah compliant
funds at last making an appearance in India? And equity funds for Indian Muslims
in an over-heated market? It appears to be a good strategy by fund sponsors
entirely based on greed to lure the small number of Indian Muslim individuals
and institutions into playing a game over which they have little control and
which they hardly understand. Hard to believe, but some fund sponsors are even
talking about commodity funds and hedge funds for Indian Muslims!!

Indian Muslim intellectuals and high-networth individuals have in the past
largely stayed away from speculative financial products. With the benefit of
hindsight one can say this has been a good strategy. More encouragingly, an
enormous amount of community savings especially in the Southern India has been
channelized into building permanent assets in the form of schools, colleges,
hospitals and other development-related projects that serve the community in a
way that is most desirable. Any suggestion to transform these assets into
investments of the speculative variety is ill-motivated or outright stupid and
should be greeted with the disdain it deserves.

It is sad that Dr El-Gamal’s ideas on financing education in US around Islamic
Centers did not receive the attention it deserved so much on the IBF Forum.
Perhaps his ideas do not allow much room for greed that galvanizes many people
into action. But I am sure these would have struck a chord in people who want to
contribute to Islamic finance and the Muslim community in a self-less way. The
Indian scenario calls for implementing ideas around similar lines. Give the
Indian realities it would be worth while to experiment with setting up
microfinance centers around the existing educational complexes where Muslims of
all ages may be provided with technical assistance/training and then the
technical assistance program may be linked up with provision of microfinance
services. And of course, such projects may be designed both on not-for-profit
basis and for-profit basis to be attractive enough to the self-less and the
not-so-self-less.

Mohammed Obaidullah
Jeddah, KSA

daniel said...

If you think the bubble will brust for outsourcing in India anytime soon...think again. I recommend this report to anyone interested in India for whatever reason.

Investing in India

Enjoy…Cheers!

Kaushik Majumdar said...

Can you please tell me one thing? Is it necessary to drag one's religion into every aspect of life? What is the connection beween investment and religion? when Sharia was originally written, then so many financial instruments were not available. After all you are using English language for this blog. I am sure English is not a Sharia languae. I believe it's better to change and adapt with the changing times than being stuck with thoughts and opinions of long gone. My idea is not to offend anyone. If I offended anyone, please accept sincere apologies. But I had to express my views.
Regards

Felicius Cordiferanta said...

Nice article!

ilanit said...

Los Angeles private equity and hedge fund borrowing are the main things propping up the stock market these days. That won't last forever, but for now it's hiding the real economic damage that is being done.The tax issue is valid, and something most people can understand, but the real tragedy of the current situation is much more complex.