Shrinking Space for Islamic Finance in India

The deferment of the launch of State Bank of India’s Shariah Equity Fund in December 2014 is an indication of the level of opposition to Islamic finance. This article looks at various events related to Islamic banking in India and argues that shariah-compliant products will go a long way in the financial inclusion of the Muslim community.

The deferment of the State Bank of India (SBI) Shariah Equity Fund, which was to be launched on 1 December 2014, has stirred a debate in the media regarding the suitability of and need for shariah-compliant products in the Indian financial market. The SBI Mutual Fund did not officially offer any particular reasons for the deferment except state, “Based on inputs received from various participants in the pre-launch meetings, it has been decided to review the structure of SBI Shariah Fund.” However, the drift and tone of the articles and views that have appeared in the print, electronic, and social media since then, and the last-minute nature of the announcement lead one to suspect that perhaps pressure was brought to bear on SBI Mutual Fund for other reasons.