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Shariah-compliant investments a challenge for stock brokerages

Shariah-compliant investments a challenge for stock brokerages
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First Published: Mon, Mar 12 2007. 12 21 AM IST
Updated: Mon, Mar 12 2007. 12 21 AM IST
Ihave come all the way from Bhayender just to to know about the stock markets,” said Hamid Ali, a disappointed 70-year-old who couldn’t fend off scores of others who tried to find room at the Nehru Centre room where an Islamic investment opportunities conference was under way on Saturday.
Inside, men attired in immaculate kurta-pyjamas—many sporting skull caps— made up a large majority of the room.
A separate section was devoted to burka-clad women, most of whom had accompained their husbands to the venue, many taking copious notes.
On stage were a slew of experts who held forth during the all-day event, hosted by Parsoli Corporation and Markazul Ma’arif, an educational institue, about investment opportunities for Muslims.
Parsoli, one of the only two known Islamic brokerage firms in the country, aimed at offering advice to the nearly 150 million Muslims, is organizing similar educational seminars to try and deal with complex issues that many religious Muslims face when it comes to investing in the stock market.
Shariah, the Islamic law that regulates aspects of day-to-day life of Muslims, bars them from earning income based on either speculation or through interest-generating products.
With a huge Muslim population, India still has very limited options when it comes to Shariah-compliant investment products and services unlike many other countries.
Companies such as Parsoli and Idafa Investments, which is the other Islamic brokerage firm in the country, are taking nascent steps to spread awareness and increase opportunities for Muslims to invest in markets that have been generating high double-digit returns in recent years.
The list of speakers at the conference centre included Mahesh Bhatt, the film producer and director, a counsellor from the US embassy, two fund managers and Uto Baader, the owner of Germany’s Baader Bank, which has a 24% stake in Parsoli.
The speaker who got repeated applause was a Shariah scholar, Sheikh Mufti Salman Mansoorpuri, who recited verses from the Quran to reiterate the merits of increasing wealth to feed one’s family, even as he pointed out that there was a likelihood of deviating from Shariah laws if one got carried away by the colour of money.
An apologetic Zafar Sareshwala, the owner of Parsoli, said he was unable to find an Urdu-speaking presenter, noting that he hasn’t come across Muslims who are in the stock-broking profession.
But the lack of Urdu speakers didn't diminish the palpable interest among the audience to know more about investing. So much so, that when the audience was asked whether there should be a break for a mid-day namaaz, the majority from the crowd wanted the seminar to continue. Only a few went out to offer prayers.
“We are really keen on putting our money in the stock markets, but we will have to see how Parsoli can help us in halal investing” said Mumtaz Sheikh, a 40-year-old who came from Wasai, a far-flung Mumbai suburb.
Not everyone was a stock-market novice. Khalid Patel, a businessman who has invested Rs7 lakh in stock markets over the past two years, trades through a large domestic brokerage firm. He says he might switch to Parsoli after finding out more about their offerings at the conference.
The conference also attracted other professionals looking to find ways to increase their business among Muslims.
People such as Haroon Efroze, a financial advisor and Azra Khan, an insurance agent, who work for a private sector life insurance company. “It has been extremely difficult to persuade people in our community to accept insurance products,” said Efroze. “They think its akin to banking—where interest payment is involved. With conferences like these, it will be easier for people to understand that unit-linked insurance plans are just like other stock market products.”
Even after four hours of lectures, the organisers and speakers had to spend quite some time backstage with a set of inquisitive investors who had many doubts and unanswered fears.
One trader was overheard introducing himself to one of the conference organizers as the chief executive of a company with a Rs6 crore turnover. While introducing his chairman and other executuves, the apprehensive trader asked the organiser whether there would be a repeat of the debacle faced by Mumbai-based Islamic broking house Barkat Investment Group, once the largest Indian Islamic finance house that has seen its fortunes waning.
Away from those concerns, Mahmood Ahmed Khan, a local dealer of ayurvedic medicines, had become a convert.
“I have always stayed away from stocks thinking my Allah will get angry with me,” said Khan, who had dutifully stepped out for his mid-day prayers.
“But now after having heard so many distinguished speakers, I have changed my mind—I will go to Parsoli’s Mumbai office early next week to get more details.”
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First Published: Mon, Mar 12 2007. 12 21 AM IST
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