Thiruvananthapuram: Kerala State Financial Enterprises Limited (KSFE) is planning to roll out a ‘halal chitty’ that complies with the norms of
Sharia (Islamic Law). The halal
chitty will be a derivative of the NRI chitty, to be launched by the
KSFE and is aimed at the vast non-resident Keralite diaspora.
“In the first phase, the pravasi chitty (NRI chitty) will enrol subscribers from the UAE only. We plan to extend the service to other GCC countries later”, said KSFE chairman Peelippose Thomas. What has pulled back the KSFE from offering the service to Saudi Arabia and Iran, where there are hundreds of expatriate Keralites, is the concern regarding the Sharia-compliance of a product like chitty, which they may not be familiar with.
“We need to convince the rulers there that our chitty is fully Sharia-compliant. The Sharia is against levying interest and there will be restrictions to conduct auctions,” said finance minister Thomas Isaac. “We are exploring options on how to tweak the product for satisfying the norms in Islamic countries. Instead of auction, options like consensual selection of most needed customer by all subscribers can be experimented,” said Isaac.
The ‘halal chitty’ will also target subscribers outside Islamic countries, who prefer to stick to the religious law as a way of life.
Though there is no visible interest component in chitty, the complex structure of repayment instalments which varies in accordance with auction amounts by bidders gives a notion that interest component is buried within the product.
Ashraf Kadakkal, faculty with the Islamic history department of Kerala University, said the NRI chitty can be introduced in Islamic countries by convincing the rulers about the authenticity of the product. “Sharia law bans interest and lottery. But major multi-national banks function in Saudi Arabia. Some of them have a section for Islamic banking to cater to subscribers who don’t want interest. What is important is how we convince them about the genuineness of our product”, he said.
According to Peelippose Thomas, NRI chitty can be launched in Islamic countries only after obtaining Sharia compliance certificate from the forums of concerned clergy. “We need to submit a product which attests to their norms for scrutiny. We have sought legal advice in this regard”, said Thomas. The NRI chitty, which has received the approval from the RBI, will be launched by KSFE in association with Kerala Infrastructure and Investment Fund Board (KIIFB) and Norka. On June 12, chief minister Pinarayi Vijayan will officially inaugurate the registration of subscribers. The product launch is expected to take place in Dubai in the last week of July.
The finance department’s plan is to use the funds obtained through NRI chitty in bonds of KIIFB which in turn will be utilized for the infrastructure development of Kerala. The aim is to mobilise funds to the tune of Rs. 10,000 crore in three years.
The platform for the chitty will be completely online with an encrypted website platform providing options to join, bid auction and receive payment through a secured virtual gateway. The online platform being built by the NIC has already incorporated provision to launch ‘halal chitty’ which will have separate rules.