KOCHI: Finance Minister Thomas Isaac had embraced Islamic Banking in a big way in his previous budget. But eight months later, the interest- free endeavour failed to find a place in his latest financial blueprint for the state. This has left the Cheraman Financial Services in dismay.
The Non- Banking Financial Company with equity participation of the Kerala State Industrial Development Corporation (KSIDC) is yet to play a major role as envisaged in the 2016 budget.
The firm also incurred a loss of Rs 56.44 lakh last year. “We expected the Finance Minister to deliver on the announcements about Shariah investment made in the previous budget,” said National Committee on Islamic Banking convener H Abdur Raqeeb.
“As a strong proponent of Islamic Banking, we believe he understands its developmental and sustainability aspects. He should have urged the Union Government to introduce iinterest-free finance and banking in the country.” Isaac had put forward the proposal of setting up an interest-free financial institution to enhance investments in the 2010 budget.
Even though it was formed, it did not make any progress worth mentioning. He tried to revive the project by entrusting Cheraman Financial Services with the modernisation of the Kerala State Drugs and Pharmaceuticals Limited (KSDP) worth Rs 250 crore. The company was planned to be transferred to the Industries Department on lease post modernisation.
From this income, the firm was expected to distribute dividends to shareholders. Several large-scale projects could have taken off had this model been successful. “The idea to manufacture drugs worth Rs 250 crore by KSDP from the fund provided by Cheraman Financial Services is utopian. That is why the budget did not mention it. The Rs 100 crore KSDP could not compete with drug makers worth Rs 5,000 crore and above,” said Geojit BNP Paribas investment strategist V K Vijayakumar.
Isaac hopes the company will be profitable this year and its production capacity will be enhanced to Rs 200 crore