Plans to launch India's first Shariah compliant mutual fund have hit a roadblock with the stock market regulator Sebi (Securities Exchange Board of India) taking its time to give the go-ahead.
Market talk is that Sebi is not comfortable with a fund that would focus only on a particular community or religion.
Delhi-based Taurus Asset Management, along with Mumbai-based Islamic investment specialists Parsoli Corporation, had filed an application to launch an Islamic fund in October last year. But nine months after the prospectus for the Taurus Parsoli Ethical Fund was filed, a Sebi go-ahead is no where in sight.
Zafar Sareshwala, MD and CEO, Parsoli Corp, confirmed that Sebi had some issues on the religious aspect, but is confident that the regulator will give a go ahead as its doubts had been addressed.
"Taurus has explained and assured the regulator that it should not go by the theme of the fund. We will invest in NSE- and BSE-listed Indian companies," Sareshwala told DNA Money. He, however, refused to give a time frame for the launch.
Waqar Naqvi, chief executive, Taurus Asset Management, denied that Sebi has rejected the application. "Sebi is considering it. Delay seems to because this is the first one of its kind in the country," Naqvi said in an email reply.
Shariah forbids Muslims from receiving interest payments and from investing in companies involved in the production or sale of pork, alcohol, tobacco, pornography, gambling and non-Islamic structured finance or life insurance.
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Posted on Fri Jul 11, 2008 at 12:24:24 AM EST
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The fund in association with Parsoli has garnered Rs 100 crore in three months and expects its portfolio to swell to Rs 1,000 crore in a year.
Devesh Kumar, head of operations in the PMS division of Reliance Money, said that the company had to clear some doubts from Sebi before filing the application.
"Since the Taurus fund was not going through, we inquired with Sebi and their doubts were about why a special fund was needed for the particular community. We explained that this fund will help in bringing more money to the system and more people to the markets," Kumar said.
Reliance Money's product is the only Shariah-compliant fund in India at the moment. However, another private brokerage, Religare is also planning to file an application with Sebi in the next one month, Religare's national head, PMS sales, Roka Maliyadri said.
Fund managers pushing for Shariah-compliant funds point to India's large Muslim population and opportunities for Shariah investment in sectors like pharma, IT and mining.
At a recent Islamic investment conference presenters pointed out that 50% of BSE 500 companies are Shariah-compliant at any point of time which is more that the 250 total stocks in the whole of the Gulf region. However, local fund managers don't seem to be too enthused by the idea of an Islamic fund here.
JM Financial, which not long ago was seeking to launch an ethical fund, said such a plan no longer exists in its scheme of things. "We are not thinking on those lines at least for the next 6 months to one year," said Bhanu Katoch, executive director, JM Financial Mutual Fund.
Katoch said the first potential would be for HNIs for the Middle East who want to invest in Shariah-compliant stocks in India.
Dhirendra Kumar, CEO of mutual fund research agency Value Research, said that Shariah-compliant funds aimed at a specific group don't have a massive appeal in India.
"Mutual funds should be simple. I don't think funds aimed at a specific part of the population will work," he said adding that mutual funds, unlike PMS, are not more open about information and investment portfolio.
Source: Joel Rebello From dnaindia.com 11/July/2008
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