India’s first sharia-compliant financial company eyes Oman investment
By A Staff Reporter -
MUSCAT — India’s first sharia-compliant non-banking financial company, Cheraman Financial Services Ltd (CFSL), is looking to tap the Omani market, and indeed the wider Gulf region, for equity to fund a raft of commercial initiatives in India, based on the principles of Islamic finance.
Prominent Muscat-based businessman Dr P Mohamed Ali, who is also Chairman of Cheraman Financial Services Ltd, said the company has already begun wooing key players of Oman’s financial sector as possible investors or equity partners.
Briefing journalists about the ground-breaking company and its mandate, Dr Mohamed Ali said CFSL is now fully operational, having been granted a license from the Reserve Bank of India (RBI) to operate as a non-banking financial company. That approval came in July this year, several years after plans were first initiated plans to launch India’s maiden non-banking finance company in 2009.
Based in the southern Indian state of Kerala, CFSL has been set up an authorised capital of Rs 1,000 crore (around $200 million). The Kerala State Industrial Development Corporation (KSIDC) has contributed 11 per cent of the equity capital, while several distinguished Non-Resident Indian (NRI) investors based primarily in the Gulf region, are pitching in a further 26 per cent.
According to CFSL’s Managing Director, A P M Mohammed Hanish, the company has been authorised to operate in the areas of equity finance and leasing. “Along with this, we also intend to focus on infrastructure development, particularly of wakf land in association with the state wakf boards. Around 600,000 acres of wakf land currently lies idle in different places of India at this current time,” he said.
Additionally, CFSL aims to provide equity finance for major infrastructure projects initiated by either the state government of Kerala or the federal Indian government. “Further, we intend to support major commercial projects of the private sector which require equity finance. In the case of leasing, we will primarily be focused on the construction equipment sector and the medical equipment sector,” Hanish stated.
CFSL, the Managing Director said, aims to raise the necessary investment through share capital contributions from a variety of sources, including non-resident Indians, various sovereign wealth funds of the Middle East, banks and financial institutions, high net worth individuals, and family-run businesses owned by Arab nationals.
An earlier visit to the UAE, he said, yielded pledges to the tune of around $20 million, equivalent to around 10 per cent of the authorised share capital. “Foreign investment is allowed to the tune of 49 per cent of the authorised capital, and we intend to mobilise investment by tapping such sources,” he said.
Significantly, Indian Muslims who eschew conventional banking will have an opportunity to avail themselves of financial instruments necessary to fund their businesses, said Dr Mohamed Ali. “This is another key advantage offered by the company. This enables them to comply with their faith, as well as to have financial instruments available to them,” he added. (OEPPA Business Development Dept)