Banking on Sharia in Kerala

Kerala offers huge potential for setting up financial institutions based on Islamic tenets, given its strong historical ties with West Asia and a large Muslim population that adheres to investment norms prescribed by Sharia. Islam prohibits giving or receiving of interest, which it categorises as usury. It does not prohibit trading and investment but advises followers to share risks. It tells the investor to share the loss, just as he would have shared the profit, in case the investment makes a loss. The West has successfully repackaged this investment process as Islamic banking. Kerala is trying to follow that path.
On the other hand, Kerala is home to the first private Sharia-compliant and Sebi-registered venture capital fund meant for the real estate sector and a portfolio management service for Sharia investment. Leading experts of Islamic banking like Muddassir Siddqui, a Sharia scholar and head of Islamic finance, Middle East, SNR Denton and Company, feels that Kerala could rival London and Paris. Many institutions and individuals in West Asian countries are very interested in investment opportunities in India, which is seen as a potential economic powerhouse and has traditional relations with Arab countries.