to relax the conditions for setting up the Islamic Venture Capital Funds (IVCF) particularly lowering the required threshold limits for them.
They also urged the government to direct the financial regulators such as RBI, SEBI, NABARD etc to set up special fund to promote financial literacy in the country.
Speaking at the inaugural session of two-day International Conference on “Prospects for Islamic Venture Capital Funds in India” organized by the Institute of Objective Studies, (IOS), here Deputy Chairman of Rajya Sabha K. Rahman Khan stressed the need of introduce the Islamic banking system on a wider level as it was based on justice, equilibrium, truth and fairness.
“The conventional banking system based on interest failed to grow and assist the poor, who are thus exploited at the cost of the rich people in society” he said while emphasizing the advantages of Islamic banking. He insisted that any transaction which complies with the four principles as enunciated by the Holy Quran, will ensure well being, peace and harmony among the people which is the hallmark of a good society. He said that the followers of Islam failed to give this perfect system to the humanity.
He opined that there was not much hurdles in carrying out Sharia-based transaction as it requires minor changes in the SEBI rules.
Echoing his views, former Chairman, SEBI and Dy. Chairman, RBI, Jaipur, D. R. Mehta said that if India has to progress then Islamic Venture Capital Funds, (IVCFs) have to be launched in the country as Malaysia and other countries are successfully experimenting with it. “India is a multi-religious country and the prospects for IVCFs are very bright and it should be developed for different sections of society”, he said.
There are 180 domestic and 154 foreign venture funds in the country and their current value is 47,000 crores rupees but the country needs 10 times more funds as new enterprises are popping up in the country every day.
OIC’s Islamic Development Bank representative Khaled M. Al-Aboodi said for creating a comprehensive and robust financial system, Islamic financial institutions need to be innovative and focus on developing Venture Capital, (VC) private equity and alternative investments and this will create an industry with a niche that is capable of competing with conventional banks. Describing the Islamic banking system as the best divine alternative economic system available before the world, he pointed out that interest-based conventional, banking institutions have become victims of bankruptcy and the world is in the grip of worst economic crisis.
Highlighting the cruelty of interest-based finance, Dr Tahir Baig, chairman of the Bareilly-based Institute of Islamic Economics and Development Studies said that interest –based system was financial terrorism, it does not allow everybody to do business as entrepreneurs always remained under terror while the Islamic system provides equal opportunities to everybody. He urged the conference to call upon the world to wipe out the interest-based system form every part of the globe.
In his valedictory address, G Ramasawamy, president of the Institute of Chartered Accountant of India, said in the wake of rapid economic progress, the country needs to focus on IVCF as it has huge potential to boost the economic growth. There is need for making a concrete proposal on the Islamic finance to be presented to the government in order to get its approval, he added. He also assured full cooperation from his institute in this regard. .
IOS chairman Dr. Mohammad Manzoor Alam said IVCF was an increasingly visible component of the capital fund scene globally. It has extraordinary potential to be of use in India’s expanding economy over the years adding that he would constitute a committee comprising of experts to look into the legal hurdles and draft proposals for presenting the government.
During the two-day deliberations, a number of Islamic financial experts and academics from India and abroad highlighted the finer points of the Islamic system and its utility and viability.