The State government has informed a Division Bench of the Kerala High Court that the non-banking financial company (NBFC) set up by the Kerala State Industrial Development Corporation (KSIDC) with private participation is to function in accordance with the Reserve Bank of India (RBI) Act, rules and guidelines.
Refuting the allegation that the company was an Islamic banking institution, T. Balakrishnan, Additional Chief Secretary, Industries and Commerce, in an affidavit, denied any discrimination against anyone on the basis of religion. Any person could subscribe to the shares of the company. He refuted the allegation that the company functioned in terms of the Shariah law. The allegations were baseless and misleading. There had been no provision in the memorandum of association or in the Articles of Association of the company for constituting a Shariah Advisory Board to supervise the company, as alleged in the petition.
Areas of business
He said the company, for doing business of shares and other investments and financial portfolio management, was suggested by a Mumbai-based financial consultancy. It was the KSIDC which had entrusted the consultancy with the task of exploring the possibility of attracting unutilised funds of Non-Resident Indians working in Gulf countries. It had suggested that the company not undertake any interest-based financing service. The company, Al Barakh Financial Services Limited, was registered under the Companies Act. It was a joint venture with private participation from big industrialists and enterprises. The company was not controlled by the government.
The affidavit sought to vacate an interim order restraining the State government and the KSIDC from commencing the operations of the company until further orders from the court.
The interim order was passed on a public interest writ petition filed by Janata Party leader Subramanian Swamy challenging the government order according sanction for registration of the company by the KSIDC.
The Hindu Ayikya Vedi and another petitioner also filed a petition challenging the formation of the company.
The hearing on the petitions was adjourned to April 5.