Kerala HC stays Islamic financial institution proposal
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Last Updated: Tuesday, January 05, 2010, 15:04
  
Kochi: The Kerala High Court on Tuesday stayed the state government's proposal to start an Islamic Financial Institution on the lines of Islamic Bank.

"The Government shall not commence operation of the proposed institution," a division bench comprising Chief Justice S R Bannurmath and Justice Thottathil B Radhakrishnan said while hearing a petition filed by Janata Party leader Dr Subramanian Swamy.

According to the petitioner, the government in its October 14 order, had accorded sanction for registration of Islamic Finance serving company by Kerala State Industrial Development Corporation (KSIDC) to provide financial services in accordance with Shariah law.

Under the proposal, KSIDC would contribute about 11 per cent equity and the corporation was taking steps to promoting Islamic financial institution. The proposed institution will not collect or charge interest for financing, the petitioner said.

According to Swamy, the CEO of the proposed company has to report to the Shariah Advisory board.

After hearing Swamy, the bench observed that the matter has to be looked into and the parties concerned have to be heard.

The Bench admitted the petition and issued notices to the state government and KSIDC.

It also gave a direction to implead the Union Government and RBI as respondents in the case.

KSIDC informed the court that the company has already been registered and that it would function as per the Companies Act and RBI regulations.

The petitioner stated that such an institution, utilising government funds, was against the secular principles as enshrined in the Constitution.

PTI


First Published: Tuesday, January 05, 2010, 15:04


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