First Islamic bank set to open in Kochi

KOCHI: India's first bank that will only deal in financial products compliant with Islamic law will open in Kochi by next year. The first project that the government is looking at the bank to finance is the 80-billion-rupee north-south high-speed corridor.

The Kerala State Industrial Development Corporation (KSIDC) has initiated the incorporation of the company with an authorized capital of Rs.5 billion. The company is expected to invest mainly in infrastructure projects and pay dividends to depositors, officials said.

Besides KSIDC, which holds an 11 percent stake in the company, P. Mohammed Ali of Oman's Galfar Group, C.K. Menon of Doha-based Behzad Group, M.A. Yusuf Ali who heads LuLu supermarket chain in the Gulf and Azad Moopen of Moopen's Group are the company's major promoters.

The Left Democratic Front (LDF) government has called a high-level meeting of officials and promoters to be held in Kozhikode on Sept. 12 to finalize the project. A similar meeting held a month ago approved the project report prepared by Ernst & Young.

The new entity will start functioning as a non-banking finance company (NBFC) before becoming a fully-fledged Shariah-compliant bank, they said. It will avoid all interest-based businesses and will set apart a social fund to provide interest-free loans to Gulf returnees to set up small-scale ventures.

By Mohammed Ashraf

© Arab News 2009