Mumbai: India's largest state-owned bank, The State Bank of India, defferred the much awaited Sharia-compliant mutual fund that was to be launched on Monday December 1 without giving any reasons.
The announcement in this regard is made November 30 on the SBI Mutual Fund website.
A brief public notice put up on the website of SBI Mutual Fund said, "Investors are hereby informed that it has been decided to defer the launch of the New Fund Offer of Sharia Equity Fund."
The notice ia signed by Dinesh Khara, MD & CEO SBI Mutual Fund. It has no mention whatsoever of when will it be launched.
The Securities and Exchange Board of India, the country's banking regulator, recently allowed the government-owned State Bank of India and three mutual funds to launch Sharia funds, according to the Associated Press.
An official said last week that the bank was expecting to attract an initial 1 billion rupees ($16.4 million) to the fund which will launch on Dec. 1.
A large section of India's Muslim population remains outside the banking system, partly because Islamic law known as Sharia prohibits interest. Shares of companies linked to alcohol, tobacco, gambling and casinos and financial institutions that earn interest would be excluded from the fund.
"It will be a diversified equity fund, including large cap, mid-cap and small cap funds," said Dinesh Khara, managing director and CEO of the bank's SBI Mutual Fund.
"We will identify stocks that meet all aspects of Sharia banking laws," Khara said.
India's stock exchanges have between 600 and 700 companies that are Sharia-compliant.
The new fund has the approval of the All India Muslim Personal Law Board, an authority that oversees the observance of Muslim civil laws in India.
In May last year, the Bombay Stock Exchange had launched India's first Sharia index, which tracks the performance of Sharia-compliant companies. These companies have given a return of 46 percent, performing better than the 30-share BSE Sensex index which gave annualized return of 41 percent.
India is only the second country outside the Islamic world where a state-owned bank is offering a Sharia-compliant fund. The U.K. issued sovereign Islamic bonds in June.
Global Islamic banking assets were estimated at around $1.8 trillion in 2013.
Demand for India to have some kind of non-interest based investment and banking system is being raised since last many years. The Indian government however did not show any interest in the system adopted by many leading economies in the world.
Meanwhile, investors who were waiting for the launch of the Sharia compliant MF are feeling let down.
Ayaz Mohammad, a HR consultant based in Chennai, who was keen on investing, said: "I was waiting for this so much. I am disheartened that there is no reason given why it has been postponed and also no date mentioned as to when it will open."
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