Political decision or commercial call? SBI MF shelves Shariah fund; Cong MP questions

The country’s largest bank State Bank of India has refuted allegation that it had shelved the plan to float a Shariah Equity Fund for political reasons rather than commercial. Congress leader K Rahman Khan had on Wednesday alleged there was “politics” behind the decision to shelve the plan to launch Shariah Equity Fund in December last year, saying it happened after “an important functionary” wrote to Prime Minister Narendra Modi opposing it. [caption id=“attachment_2163947” align=“alignleft” width=“380”]  Reuters[/caption] Refuting this claim, a senior SBI official told the Times of India that it was a purely commercial call. “The plan is to be re-examined but it has not been done yet,” the senior SBI executive has been quoted as saying in the report. Khan, a former Minority Affairs Minister, had made this allegation while participating in the debate over Budget in Rajya Sabha. He claimed that he had the particular letter in his possesion but declined to name the functionary. Khan wanted Finance Minister Arun Jaitley to respond why the scheme was stopped. He said SBI had floated Sharia Equity Fund, an open-ended scheme designed to invest money in companies that follow Islamic Shariah rules. That was to commence from 1 December, last year, but was shelved all of a sudden on the same day with the SBI announcing its deferrment, Khan said. “All of a sudden the SBI deferred the launch on December 1. Because a day earlier an important functionary wrote a letter to the Prime Minister that this should be stopped…And the Sharia Equity Fund was stopped. No reason was given whatsoever. I have the copy of the letter,” Khan said waving a paper in his hand. He said this happened even after the Reserve Bank of India was “convinced” about the feasibiliy of such a scheme, which could bring Rs 50,000 crore of deposits. “Do not look at economic issues also from the coloured glasses?…Funds could come from Mauritius but not from other states,” Khan said, who had been a strong votary of Islamic banking. “What is wrong in having yet another scheme,” he said wondering why a “well-thought out plan” was stopped. With inputs from PTI