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Saturday, 20 September 2008

India: Asset management companies eyeing Shariah gains

BANGALORE: Asset management companies (AMCs), have found a way of tapping the estimated Rs 5,000 crore-plus opportunity in the Islamic Shariah-compliant financial services space.
They are using portfolio management services (PMS) to invest in the stocks of Shariah-compliant companies.
Shariq Nisar, CEO of Bangalore-based Bearys Amanah Investments, said, “There are around 154 million Muslims in India. Their savings would definitely be over Rs 5,000 crore. If you take foreign investors and NRIs into account, this figure could swell further.”
Reliance Capital and Religare Securities have collaborated with Islamic finance firms Parsoli Corp and Bearys Amanah, respectively. And UTI AMC and DWS Investments, plan to enter the fray soon, sources said.
The minimum investment allowed is Rs 5 lakh. Nisar said another reason the Shariah compliant PMS business has become attractive for AMCs is that investors from the Middle East and Gulf are looking outside the Western and Gulf markets for better investment opportunities.
Securities and Exchange Board of India (Sebi) guidelines curtail the scope of financial institutions offering Shariah-compliant financial products and services. For example, it’s not possible to launch a Shariah-compliant bank in India as banks have to pa
y interest on deposits, while Shariah forbids payment of interest.
Sebi has allowed AMCs to launch Shariah compliant PMS businesses. The industry, though, is awaiting Sebi nod to launch Shariah-compliant mutual funds in India. Around 335 NSE-listed and 300-BSE listed companies are Shariah-compliant. Shariah forbids investment in companies involved in banking, alcohol, tobacco, gambling, non-halal meat or pornography. (DNA)
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