Parsoli Corporation of India won Best Islamic Brokerage Firm in 2007 Islamic Finance news Annual Poll conducted by Islamic Finance News.

Taurus Asset Management is launching the Islamic MF along with Parsoli Corporation.

Talking about the Taurus Parsoli Ethical Fund, a Shariah Compliant Islamic fund, Zafar Sareshwala, MD & CEO, Parsoli Corporation Ltd, said, "The most important part for us here is Shariah accountability. The story does not end just by selecting a few acceptable Islamic stocks, it is an ongoing and a dynamic process. You need a Shariah board, you need a certification, you need purification, ratios to be setup. So in that context, yes I would say that this Taurus Parsoli would be truly the first Shariah compliant fund."

Excerpts from the interview with Zafar Sareshwala, MD & CEO, Parsoli Corporation Ltd

Q: Why India with a 13% Muslim population, the highest in a non-Islamic country, does not have Islamic banking initiatives yet?

A: The most important reason why the Muslim involvement in the stock market is not there is because, till over a period of time, there was a lot of confusion within the Muslim community that whether stock market investments is Haram or Halal. Some people, particularly people in the western part in Gujarat, and in some pockets of Bombay, because they were highly educated, those people were traditionally investors in the stock market for years.

Barring these people, generally Muslims perceive investment in stock markets as something un-Islamic. There were a number of reasons for that. First was lack of education, second was the lack of awareness, and the third most important thing was that after partition, a mental-block kind of thing happened among the Muslims, this victim kind of centric mentality remained for years.

So what happened was that within the stock market gameplan, you would find hardly any Muslim players. Like for example, the stockbrokers, till a few years, there was hardly one Muslim member at the Bombay Stock Exchange. Now you have only about 3 or 4 Muslim members at the BSE and NSE combined. So, there was no participation of the Muslim community in the stock market.

Then in all the segments after that, sub-brokers, or portfolio managers, you would hardly find any Muslim. And the most important part is that you take in a city like Bombay, although it is a cosmopolitan city, you will find a bank in a Muslim locality, you will find everything, even a McDonald’s, but you are yet to find a brokerage in a Muslim-dominated area. Nobody ever went across the Muslim community. But now we are seeing the difference.

Q: On developments in the Islamic Finance and banking initiatives?

A: To develop Islamic Finance or Islamic banking you need money. Without having surplus money, you cannot develop any banking system. And yes, definitely the Islamic banking industry that has developed in the Middle East since the past so many years, of course, Islamic banking has been in existence for 1400 years ever since Islam has come, but the recent development has only started about 20 years back, and yes, thanks to these petro-dollars and the surpluses, which the GCC countries have been producing.

So the most important reason for Islamic banking to develop is because people in this region are sitting on lot of surpluses and they want their money to be invested according to the principles of Islam. So that has given impetus to develop Islamic banking and finance. Necessity is the mother of invention. When you have necessity, then people will invent or people will rediscover what is available.

Q: What Parsoli Corp has to offer to Islamic investors?

A: In the organised sector, we don’t have anybody other than Parsoli. What we have done is that we have set a benchmark because Islamic word had been abused particularly in the financial segment, this word of Islamic Finance because there was a vacuum. For many years, we did not have anything Islamic available. So, a lot of people took advantage of this word Islamic and there was a mushroom growth of Islamic investments all over the country.

But what we have done is we have created a benchmark that if somebody wants to emulate us, he has to set and come to this level where he should be a member of a recognised stock exchange, approved by SEBI, regulated, because we are working in a regulatory environment only and also in the organized segment. So we have set up that benchmark.

And then we also want to have the best infrastructure. We are offering Islamic Financial services not just because we are Islamic. We tell people that we have got the best infrastructure, the best setup, which any conventional broking house or a financial services company might be offering and we are also Islamic.

India has 150 million Muslims and we even ourselves never thought that this could be the growth. Last year in December we started with only one branch and one office only in Ahmedabad. Now in less than 13 months, we are present in 34 locations. So it is a huge market and an untapped one. And what we want to evolve ourselves as one stop shop for all financial needs for a Muslim, right from Rs 50 to Rs 5 crore or Rs 50 crore.

The requirements of a Muslim or Non Muslim are same, the aspirations are same, both require investments, they want IPOs, money in the mutual funds, they want insurance etc. So, we want to offer to Muslims the whole gamut of financial services.

Q: On Taurus Parsoli Ethical Fund, a Shariah Compliant Islamic fund?

A: We don’t claim that this Taurus Parsoli is the first Islamic fund. There have been funds in India, quite a few of them, if not exactly Shariah compliant but almost very near to the Shariah principles. But they lack the Shariah board, the Shariah audit and the accountability.

The most important part for us here is Shariah accountability. I can say it is an Islamic fund, but then who will certify that what we are doing here in this fund is Islamic or not Islamic. So the story does not end just by selecting a few acceptable Islamic stocks, it is an ongoing and a dynamic process. You need a Shariah board, you need a certification, you need purification, ratios to be setup. So in that context, yes I would say that this Taurus Parsoli would be truly the first Shariah compliant fund.

Q: On Islamic mortgage industry in India?

A: Islamic mortgage has not developed in India at all. But even the mortgage, housing finance, also has evolved in India in the very recent past. Till about last 10-15 years ago, you never had a loan of 20 years or 25 years tenure, which you have in the west. So generally, housing loan per se has not been developed in India at all.

But in the west, the housing finance and the housing loan is the most important thing. And also the Indians did not perceive owning a house as something very important in life. Like in the west, house is a religion. Like for somebody in the west like, say USA, or UK or in Europe, to own a house is like the most important dream for somebody. That feeling was not there generally in India because housing finance was not there. Only now we are seeing this, because, see a housing loan only can survive when it has a tenure of at least 20 years. Now we are seeing those kinds of things developing.

And also earlier we were in the regime of very high interest rates, and a housing loan cannot survive if the interest rates are 15-16%. But for that to happen, you need to have a low interest regime, and for that you need the economy to develop. So, actually we are seeing the economy developing now. Because of that, the interest rates are going down and because interest rates are going down a lot of housing loans have come up. Earlier we only had one or two companies offering housing loans, now you have scores of them.

Islamic mortgage has only developed in the west after when the mortgage had developed very well. So now yes, in the west, particularly in the UK, you have a lot of western banks that are offering Islamic mortgage and they have been very successful. Even in the US, there are a lot of conventional banks that have setup Islamic banking windows.

In the west what has happened is, although, they are not Islamic banks, but most of the western banks have developed an Islamic window within the conventional bank. And the most important requirement for a Muslim or for anybody is the housing loan. So, Islamic mortgage has developed there. I think once the economy develops more and Muslims start getting into the mainstream of the economy of this country, I think any of these finance companies or housing finance companies will roll out their own Islamic mortgages.