Shariah-compliant services are emerging as the next hot trend in the financial space in India. Already quite a rage in the Middle East, these services are picking up pace in India as well. In the first week of this month, Reliance Money announced the launch of its Shariah-compliant Portfolio Management Services (PMS) in partnership with Parsoli Corporation. In addition, a number of mutual fund houses like Reliance Mutual Fund, Way2Wealth, Edelweiss and UTI Asset Management also plan to launch Shariah-compliant services in the coming months.
The portfolio management scheme by Reliance will offer services to clients with an investment surplus of Rs 5 lakh. According to Sudip Bandyopadhyay, managing director and chief executive officer, Reliance Money, “These services are for investors who keep their money idle in cash due to the unavailability of investment options that are Shariah compliant. This fund gives them the opportunity to invest in the right stocks.”
Investments made through this portfolio management service will be predominantly in Indian equities. Apart from assisting Reliance in marketing the schemes extensively, Parsoli Corporation will ensure and certify that the investments are in compliance with the Shariah.
Shariah, the religious law of Islam, places restrictions on commercial and financial activities permitted to its followers. According to the law, the followers of Islam are allowed to invest only in ‘clean’ stocks. Investing in industries involved in the production and sale of alcohol, tobacco, vulgar entertainment, lending and borrowing on interest (banks and finance companies) is strictly prohibited under the law.
After Reliance Money’s PMS, group firm Reliance Mutual Fund is understood to have filed its prospectus with the regulator to launch an Islamic fund. The group is in an advanced stage of talks with an Islamic institution for launching the fund. As the next step, Reliance is also planning to launch its entire spectrum of financial services the Shariah way.
Suneeti Ahuja, ExpressMoney India, May 26, 2008
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