Mumbai: Trying to capitalize on those looking to offer products for the $300 billion global Islamic investment industry, the London-based Securities and Investment Institute, an examining and training body that conducts finance qualification tests, is pushing its Islamic Finance Qualification course in India to fund managers.
“About 100 people in various locations took our pilot test globally, and in India people have just begun to seek more information about the test,” says Arwa Tapia, Indian liaison officer for the institute. “Though it’s early days yet, we can gauge a lot of interest among Indian professionals about the opportunity in Islamic finance.”
Launched in October 2006, the course aims to be an international benchmark in the area of Islamic finance. The institute says the course material costs £75 (Rs6,075) and the exam fees are £150.
The exam can be taken from computer-based testing centres in Bangalore, Kolkata, Chennai, Gurgaon, Hyderabad, Mumbai and New Delhi. The course, which targets new and existing investmentprofessionals specializing in Shariah-compliant finance, trade, investment and insurance, covers Islamic finance from both the technical as well as the Shariah perspective. The test was developed inassociation with Ecole Superieure des Affairs, the Franco-Lebanese business school based in Beirut.
“We do have Islamic funds in the developed nations,” said Nikhil Johri, managing director, ABN Amro Asset Mangement (India) Ltd. “Realizing the huge potential of such funds in Asian countries, we are thinking of launching such funds though not in India yet. But, given the opportunity, I will definitely encouragemy fund mangers to takesuch tests.”
The institute is not the only one offering courses. Mohammed Obaidullah, the founder of the Islamic Development Bank of Dubai, has been running such a certificate course in Islamic finance since 1999 but the response to the course in India, he says, “has been discouraging...less than 30 people from India take the test there every year. No large industry players have taken the initiative on Islamic finance.”
Islamic finance as a field is gaining significance as fund managers and other products peddlers look at the nearly $600 billion of disposable income from the Gulf countries alone that is looking for avenues to invest in Shariah-complaint stocks in emerging markets. Shariah is the legal framework that covers the daily aspects of public and personal lives that Muslims follow. According to a 2006 study by Shariq Nisar, a Mumbai-based Islamic finance expert, a larger percentage of Indian listed companies were Shariah-compliant than in Malaysia, Pakistan or Bahrain. At the National Stock Exchange, 335 of the 1,000 companies are Shariah-compliant and 237 of the Bombay Stock Exchange’s 500 largest companies areShariah-compliant.
Zafar Sareshwala, managing director, Parsoli Corp, one of the two organizations offering Shariah-compliant investing opportunities for Muslims in India, says while such qualifications are a move in the right direction, Indian fund mangers want a slice of the Islamic finance industry without calling their funds Islamic.
“In India, there is a perception that launch of Islamic fund would hurt the secular sentiment of the country but to get a Muslim to invest, one has to call it an Islamic Fund. Instead of being scared of the consequences, they should look at it like a business opportunity,” he says.
The Islamic financing industry is yet to take off in India. Among the most important reasons is the lack of qualified religious scholars and qualified bankers. “Even a short workshop is enough, but there is a great dearth of qualified scholars and asset managers,” says Ashraf Abdul Haq Mohamedy, managing director at Idafa Investments Pvt Ltd, a Mumbai-based brokerage that does only Shariah-compliant investing. “In the absence of proper infrastructure, qualified and an Islamic Index, we are not able to attract funds from the Middle East while smaller markets such asMalaysia and Pakistan getpetro-dollars.”
West Asian investors are increasingly looking at Shariah-compliant investing outside the US, where accounting norms post 9/11 have made such investing hard and Indian banks are waking up to the opportunity. Kotak Mahindra Mutual Fund is launching a Dubai-based fund that will help such investors play in Indian stocks in a Shariah-compliant way. Sundaram BNP Paribas will also apply to the regulator to run a Shariah-compliant fund for the domestic market. “We will not be actively picking stocks,” says Sanjay Santhanam, vice-president, sales and marketing at Sundaram BNP Paribas. “We will either link our fund to our existing international offering or to Standard and Poor’s upcoming India Islamic Index.”