Islamic Bank soon in Kochi

via Courtesy: www.expressbuzz.com published on September 3, 2009

KOCHI: A high-level meeting will be held on September 12 in Kozhikode to discuss the steps to be taken for setting up the first Islamic bank in the country. The State Government-aided Islamic Bank will come up in Kochi.

Sources close to the Kerala State Industrial Development Corporation (KSIDC) said that the KSIDC would have 11 percent stake in the proposed banking firm.

According to sources, the bank will be first registered as a Non-Banking Finance Company (NBFC). Later, it will be transformed into a fullfledged Shariah-compliant bank.

The registration formalities will be completed in 2009 and the financing company will be operational by mid 2010,” sources added.

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Shariah (Islamic law) and its practical application through the development of Islamic economics.

Shariah prohibits payment of fees for lending money for specific terms, as well as investing in businesses that provide goods or services considered contrary to its principles and will be termed as Haraam (forbidden).

There are also reports that an initial capital of Rs 500 crore will be mobilised from leading Non- Resident Indians (NRIs) and Indian business houses.

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