The State Bank of India Mutual Fund (SBIMF) deferred the launch of its Islamic financial instrument, first of its kind from a government-backed entity in the country at the last moment. The decision to hold the rollout of the sharia-compliant mutual fund was taken on November 30, a day before it was to be launched.
Consultations for the fund had been going on for a while and all the arrangements were in place to attract the investors in the country, which is home to the world’s third-largest Muslim population.
“This fund was to be India’s first credible effort to promote sharia investments from the biggest financial institution in the country, the decision to defer it came at the very last moment,” H Abdur Raqeeb, general secretary of the Indian Centre for Islamic Finance, said.
However, the SBIMF argued that the decision was taken to improve the product. “In view of the inputs received from various participants, it has been decided to review the structure of SBI Shariah Fund and that has led to the deferment of its launch,” Dinesh Kumar Khara, chief executive officer (CEO) and managing director of SBIMF, told HT.
This fund would make India the second country outside the Islamic world to have a state-backed entity making a sharia-compliant offering, after the UK. Islamic banks offer financial products, such as Sukuk bonds and equity funds that don’t charge interest, as it is prohibited in Islam.