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More than 1100 people gathered to hear investment pundits speak on the topic, “Islamic Investment Opportunities” in Mumbai recently.
Parsoli Corpora-tion organised what it bills as the first “Islamic Investment Opportuni-ties” conference in Mumbai last month to discuss Shariah-compliant opportuni-ties. The conference was organised by Zafar Sareshwala, managing director of Parsoli, the Ahmedabad-based brokerage firm which also launched an Islamic financial portal at the event.
Sareshwala has tried to build investor confidence by teaming up with religious scholars such as Maulana Burhanuddin Qasmi and Mufti Abdul Qayoom, who is also an investor in the stock market. “Traditionally, Muslims did not enter the market because they equated it with gambling,” says Qayoom. “But now they see that there are opportunities to make money in a halal way.”
More than 1100 people gathered to hear investment pundits speak on the topic, “Islamic Investment Opportuni-ties”. Curiosity among Muslims about Shariah-compliant invest-ment products can be gauged from the fact that people had travelled from as far as Bhiwandi and Pune to know about how to invest according to the rules of Islam. Muslims from all walks of life, lawyers, social workers, burqa-clad women and even imams, had come responding to advertisements in an Urdu newspaper about this investment conference.
Sareshwala, was delighted with the response. “There were 920 seats and we had registered 1400 people in just three days. We thought that about 25% would not turn up, but by 11 am the auditorium was full. This could be the first time that people had to be turned out of an investment conference,” said Sareshwala. He now plans to localise such conferences into small areas, especially where there is a sizeable number of Muslim population. “We will break it into areas like Mira Road , Mumbai Central, Agripada, Kalyan, Dombivli and Kurla,” Sareshwala says. He expects to get 1,500 clients in the next six months, many through this conference.
“The stock exchange of any country is a barometer of its health,” says Sareshwala. “For Muslim investors who wish to conform to the Shariah in matters of personal finance, asset-creation must be a halal exercise -no association with alcohol, no unethical means, no pork, and no flippant entertainment businesses. While a few so-called Islamic banks and chit funds failed, the equity market will succeed”, he added..
According to Anand Tandon, investment manager and founder of Griffon Investment Advisors, about 50 per cent of the BSE 500 is available to Muslim investors. While he spoke at the conference on how the equity markets work, how the market is booming, Tandon said the broad theme of the conference was also to get ulemas to talk to the community on the research, tell them that their country is on the growth path and they cannot deprive themselves. For that, partnering Parsoli is the Markazul Ma’arif, an Assam-based non-governmental agency with a Mumbai arm that imparts English language higher education to ulemas, mostly the toppers from country-wide madrasas. For Maulana Burhanuddin Qasmi of the Markazul Ma’arif, literally, it means Centre of Excellence, it all began with a research paper completed by one of his students last year. “It was on the modern economy in the light of the Quran,” says the Maulana. “We found that there are possibilities in the existing stock market where Muslims can invest, but simply don’t have the information required.”
Sareshwala stresses that his company is completely within the regulatory environment, registered with the SEBI, listed with the BSE, very close to getting a commodities listing. That the conference is an investment, a huge business opportunity for his firm is no secret. Still, between recruitments for four or five new branches in Mumbai, he says: “We have everything that a Motilal Oswal or a Merrill Lynch can offer you, plus Shariah-compliant invest-ments.’’
Even educated Muslims are not sure if they can invest in the stock market. Most of them still hoard wealth and hide stacks of money in their pillows and mattresses
But, even as Islamic investment and banking services are gaining ground in many parts of the world, Indian Muslims, bereft of most Shariah-compliant offerings, are finding themselves torn between the urge to invest in a booming stock market — up a whopping 47 per cent in 2006 — and strict religious edicts that bar them from earning income based on either speculation or through interest-generating products.
Even educated Muslims are not sure if they can invest in the stock market. Most of them still hoard wealth and hide stacks of money in their pillows and mattresses.
“We did explore the demand for Amanah in the Indian context and met the Reserve Bank of India in this regard, but currently the regulatory environment for banking in India does not permit us to launch Amanah,” says Nicholas Winsor, head of personal finance at HSBC India, even as he notes that the “Muslim wealth is substantial in India.” HSBC is not alone in not being able to cater to this potentially lucrative segment. Over 300 institutions outside India spread across the Middle East, Europe, Asia and America, offer Shariah-compliant banking and financial services. HSBC, Deutsche Bank, ABN AMRO, UBS, Citigroup are among the banking majors that offer Islamic financial services globally, but not in India . Their assets are valued at $500 billion (Rs 22 lakh crore). But in India , there are just two brokerages- Idafa and Parsoli Corporation Ltd that offer formal Shariah-compliant services.
Indeed, more Muslims seem to be starting to dip their toes in the market if Idafa’s numbers are any indicator. Ashraf Mohamedy, who heads Idafa, one of the two Indian Shariah, or Islamic law-compliant brokerages in India says that, of his investor base of about 1,000, some 350 have come on board just in the past year. With its three television sets tuned to financial channels, Idafa’s office in a dilapidated building near Crawford Market has the trappings of a regular brokerage though the excitement is definitely muted, in part because day trading, where money is made off intra-day volatility, is forbidden under Shariah. Still, Mohamedy says his clients’ average annual returns this past year has been between 30 to 40 per cent.
Mohamedy updates his list of Shariah-compliant stocks at regular intervals. At the moment, the list includes roughly 15 per cent of the listed stocks on Indian bourses — 780 of 4,600.
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