Thiruvananthapuram: Kerala government and a few leading Gulf-based NRIs have decided to float Al Barakah Financial Services Limited, the country’s premier financial institution dealing in Shariah-compliant financial products.

A high-level meeting here yesterday decided to launch the investment company, which would start off with leasing and housing loans, by March next year. Kerala State Industrial Development Corporation (KSIDC), NRIs and local entrepreneurs will be stake-holders.

KSIDC, one of the 20 promoters, will permanently hold 11 percent of the stakes. Fifty per cent of promoters are Non-Resident Indians, who are mostly from the Gulf countries and the rest of the 49 percent stakes would be issued to the public. P Mohamed Ali, managing director of Oman-based Galfar Engineering and Contracting Company, MA Yusuf Ali, owner of Dubai-based EMKE Group, promoters of Kerala-based Muthoot Group and C K Menon, chairman of the Qatar-based Behzad Group are among the promoters.

Those who invest a minimum of Rs10m will be a permanent director of the company, which will be headquartered in Kochi. The firm will have nine working directors, two of whom would be from KSIDC. The company will have an authorised capital of Rs 10bn. The initial paid-up capital will be Rs1bn.

Kerala government has been emboldened to set up the Islamic investment company with Rs 370bn NRI deposits in commercial banks in the State. KSIDC will set up an advisory board consisting of Shariah experts to guide the management of the company.

Ernst & Young, in its feasibility study report, has proposed the formation of a non-banking financial company (NBFC) with more funding from Federal and state government agencies.

The firm, through its dedicated arm, will procure capital equipment or property and lease it out under installment plans to clients. The company, which commits itself to undertake business risks, would be entitled to a share in profits through the mechanism of rent, fixed or variable.

The new venture is aimed at those who “believe in investing in clean assets”. Shariah prohibits investments in companies dealing in alcohol, conventional financial services (banking and insurance), entertainment (cinemas and hotels), tobacco, pork, defence and weapons.

the peninsula