Plans afoot for financial products that comply with Shariah

Parsoli Managing Director and CEO Zafar Sareshwala, who was in the city on Sunday to participate in an Islamic investment opportunity conference organised by the group, told The Indian Express that his group will offer new financial products that comply with Islamic guidelines concerning investments.

The move is expected to pool in untapped funds from the Muslims who do not invest in securities or other financial products due to personal religious beliefs.

Parsoli has formulated the Islamic mutual fund in co-ordination with the Taurus Mutual Fund (Taurus Asset Management Co Ltd).

“We are awaiting the approval of the Securities and Exchange Board of India (SEBI) after which the Taurus Parsoli Ethical Fund will be set up. This is our first Islamic fund. Once this is through, we are looking forward to launch a number of financial products. We are also planning insurance products. Parsoli is also gearing up to launch an asset management company. This will take around 18 months,” Sareshwala said.

The fund is expected to mop up investments worth Rs 500 crore. The fund intends to draw up a portfolio that will have equities of those companies that delve in services and products, which are considered Halal (legal according to Islamic law). Thus, the fund will exclude shares of companies that earn profits through interest (banks, insurance), deal in products like liquor, pork meat or offer services like gambling and dance clubs.

The newer financial products will follow the Islamic guidelines too —- not investing in companies that have a debt of greater than or equal to 33 per cent of market capitalisation and companies earning interest income more than five per cent of their gross revenue.

“There are certain restrictions on the nature of investment. But the fund is meant for all. We will declare what’s the amount the companies (in the portfolio) have earned as profits and what has come as interest. This will help Muslim investors separate interest from the total returns offered through the fund,” said RK Gupta, Managing Director, Taurus Asset Management Co Ltd.

With 34 offices across India and 30,000 account holders, the company is now eyeing expansion in the eastern states where there is a substantial Muslim population.