The Kerala High Court today adjourned a petition filed by Subramanian Swamy, a former Union minister, against the proposed commencement of an Islamic bank with state participation. A bench of Chief Justice S R Bannurmath and A K Basheer adjourned the case for january 5, for a detailed hearing.
Swamy had challenged the October 14 order of the principal secretary, industries, of the state government, allowing Kerala State Industrial Development Corporation (KSIDC) to register a company to provide banking services as enjoined in Muslim personal law (sharia). The Kerala government proposes to set up the first Islamic bank in India, with 13 per cent equity participation of KSIDC.
The proposed bank will be registered as an NBFC, as the Banking Regulation Act does not provide for operating banks under the rules in question.
The petitioner argues that such an institution would be against the basic principles of the country’s Constitution, that provides equal status to all religions. Starting a bank that follow sharia principles and under a sharia board will be a preferential treatment to a religion.
KSIDC had invited applications for the posts of chief executive officer and company secretary for the proposed NBFC through its web site. The notification states the selected officers should report to the sharia board and clearly states the institution would be governed as in Muslim personal law. As Sharia principles are confined to Muslims, commencing a bank under this law will be against the basic principles of the Constitution, the petitioner says.