South Asian countries ramp up efforts in Islamic finance - IFN

South Asian countries ramp up efforts in Islamic finance

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GLOBAL: Bangladesh and India have announced several Shariah compliant initiatives demonstrating the positive reception of Islamic finance in the Indian subcontinent. Bangladesh Bank seeks to create a BDT1 billion (US$12.67 million) refinancing fund for the SME sector in the country, with the Bangladeshi government revealing plans to make the fund available to businesses in the rural areas of the republic by January 2014 via eight Islamic banks. The mandated banks will receive a revolving fund to be offered to their targeted patrons at a reduced interest rate, at different levels of allocation based on customer demand. According to statistics from the central bank of Bangladesh, the SME sector received a total of BDT419 billion (US$5.31 billion) for the first half of 2013, and through proper finance and training, the government looks to enhance the country’s entrepreneurial sector in the long-term. Meanwhile in neighbouring India, Kerala-based Cheraman Group plans to fund a number of infrastructure and industrial projects across the republic. As the first Shariah compliant non-banking institution in India, the firm is preparing to raise a substantial portion of its INR10 billion (US$158.72 million) authorized capital from Middle Eastern investors. Proceeds therefrom is said to be directed into equity finance, leasing and infrastructure developments, particularly targeting available Waqf lands. At present, the group’s holding company Cheraman Financial Services (CFSL) is involved in a commercial complex project in the district of Kannur. Apart from that, CFSL has already identified development ventures in Hyderabad, southern India, and Mumbai, which include the construction of chemical processing plants and an airport.