Islamic banking to help jobless expats

Kerala finance minister TM Thomas Isaac proposed on July 21st, 2009 an interest-free Islamic banking system to help recession-hit expatriate workers returning from West Asia.

Kerala finance minister TM Thomas Isaac proposed on July 21st, 2009 an interest-free Islamic banking system to help recession-hit expatriate workers returning from West Asia. The Gulf Cooperation Council member-countries should contribute to the welfare fund, he said. "Welfare funds are set up with the contribution of the government, the employees and the employers. We would like the Gulf countries to contribute to the fund the government has set up," Isaac said at an international seminar at the Centre for Development Studies, Thiruvananthapuram. Kerala budget has earmarked Rs10 crore for a welfare fund to support its expatriates returning jobless from overseas destinations without even completing two years. Over 25 lakh Keralites are working abroad, 89% of them in West Asian countries. The state budget will also facilitate loans from the Kerala Financial Corporation to Gulf returnees who intend to invest in industrial and commercial ventures. The corporation will form a package of Rs100 crore to support them. As per the latest data, 18.5 lakh went abroad for work and 8.9 lakh returned in 2007. Isaac said the government was mulling over an Islamic banking system to grant loans to returning expatriates. The government has formed a promoters' group, led by NRI businessman Mohammed Ali, to work it out. "Islamic banking doesn't work on interest. It invests deposits in business and returns a share of its profit to depositors," he said. He said the Gulf countries had helped the state rehabilitate those who lost jobs in the wake of the Kuwait war in early 1990s. "The age-old ties between Gulf countries and Kerala make us hopeful to find a way out," he said adding that more expatriates may return in the coming months. Islamic banking is popular in north Kerala, where merchants and businessmen avail of loans without any interest and repay it from their profits. The exponents claim the system has a near-total recovery rate. Shariat law, prevalent in Islamic countries, bars bankers from collecting interest on money. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=4322&Cat=4&RetId=98