PTI
New Delhi: The country is likely to get its first Islamic mutual fund soon, as a Delhi-based asset management company Taurus has approached capital market regulator Sebi to launch such a product based on Shariat laws.
“Subject to Sebi approval, we expect to mop up Rs500 crore from Taurus Parasoli Ethical Fund,” Taurus Mutual Fund managing director, R K Gupta, told PTI here.
Detailing the features of the five-year closed-end fund, Gupta said it would invest in shariat-compliant stocks, whose underlying companies aren’t engaged in businesses that are banned by the Islamic laws.
He claimed 71 stock in BSE-100 and 366 stocks in BSE-500 are Shariat-compliant.
Gupta said the product was likely to attract more non-Muslims than Muslims, since the concept was quite business-like.
Since interest income is banned under Shariat laws, Taurus would furnish quarterly disclosure of income, breaking it up into interest income and capital appreciation.
Those who do not want the interest can donate it to Zakat, which is an obligation on Muslims to pay part of their income to specified charities to uplift poor, the destitute and so on.
This break-up would also enable subscribers to understand operating income of companies in the underlying stocks better, and they would be more comfortable making judgements about stocks, Gupta said.
Parsoli Corporation Ltd, a Mumbai-based firm, would advise Taurus AMC about the Shariat-compliant stocks and assist the fund house in marketing the product. But it would be entirely up to Taurus to decide on investment in these stocks.
Every three months, Taurus would send a report of investments in these stocks to a Shariat board, consisting of three eminent Islamic scholars, Gupta said. If any stock is found to be non-compliant with the Shariat, Taurus would have three months to withdraw those investments.
Gupta said the company also plans to introduce three more products, including one diversified equity scheme for NRIs. Taurus would come out with a new marketing strategy for these funds.
While Taurus expects to launch the Islamic Fund and one more fund this fiscal, two more funds may be introduced in the next fiscal, he said.
Launched in 1994, Taurus Asset Management Company was initially promoted by IFC Washington and Lazard India Ltd. In 1999, it was bought out by Delhi-based HB Group, which merged its HB Mutual Fund with Taurus later.