New Delhi, March 8: India’s Muslims will be urged this weekend to shed their fear of banks, stocks and mutual funds, invest their money, and watch it grow.
The country’s first ever Islamic Investment Opportunities conference, to be held in Mumbai on Saturday, will argue that Islam may forbid speculation but allows core investments as long as the means are Shariat-compliant.
Joint organisers Parsoli, a Mumbai-based investment company, and Markazul Ma’arif, an education and research centre, have invited clergy, mostly from Uttar Pradesh and Bihar, to help break their community’s “traditional mindsets” on money.
M.B. Kazmi, a Markazul director, said studies by his centre showed that in the metros, the majority of Muslims had base assets of over Rs 1 lakh but were reluctant to take the money out because of “lack of confidence”.
“Most of them are practising Muslims who fear they may be guilty of committing haram (a crime) by making un-Islamic investments,” he said.
The conference is expected to showcase a convert: Mufti Ishtiaq Ahmed Azmi, who got his degrees in jurisprudence from the Dar-ul Uloom in Deoband.
“The economics syllabus in the madarsas needs to be updated to remove popular misconceptions about banking and investments. I studied the modern economic system from an Islamic perspective for a year and found that most of the concepts were easy to understand and apply,” Azmi said.
“There’s nothing in the Quran and the Prophet’s sayings that forbids Muslims from competing in a dynamic economic order.”
Kazmi said the conference’s objective was to start a debate, whose outcome could be codified into some kind of an economic law setting out the parameters for investment by Muslims. He said imams and scholars on the Quran, Hadees (a compendium of the Prophet’s sayings) and the Arabic language would draft the new law. “The Quran has words that are the equivalent of ‘share business’, ‘debts’ and ‘security money’, but these have to be rediscovered.”
Some Muslims believe that even without a reinterpretation, Islam affords a little leeway on interest: it is permissible to invest in businesses whose interest income is less than 10 per cent of their total revenues. If the earnings on interest are channelled into philanthropy, there’s no problem. But sects are sharply divided on the subject.
What’s definitely banned are investments in companies engaged in conventional finance, alcohol, tobacco, gambling, “vulgar” entertainment and — in India — sugar companies, because they generate molasses that are used in making liquor.
Despite these restrictions, India fares well on Shariat-compliance. A four-year survey of listings on the National and Bombay stock exchanges shows that while 115 of 988 companies passed the test in 2002 on the NSE, the number had gone up to 335 out of 1,000 by 2005. In the BSE, while only 95 of 500 companies made the cut in 2002, the number was 237 out of 500 by 2005.
But Ashraf Mohamdey, who owns Idafa Investments and will be at the conference, is cautious.
Mohamdey’s Mumbai-based company targets the middle-class retail investor. Although its growth over 12 years has been problem-free, his main concern is that India is not as “open” as Europe and the US, or even Sri Lanka, who have institutionalised Islamic banking without inviting the charge of being “communal”.
The Centre on Tuesday denied having decided to set up a committee to study the feasibility of setting up an Islamic bank.