India’s Ministry of Minority Affairs has enlisted a Kuala Lumpur-based body to help develop Islamic endowments, or awqaf, aiming to mobilise a large pool of assets in a country that is home to one of the biggest Muslim populations in the world.
The World Islamic Economic Forum Foundation, which organises conferences and workshops on Muslim business around the world, will hold a roundtable later this year to discuss ways to improve management of India’s estimated 490,000 waqf properties.
Institutions such as the Jeddah-based Islamic Development Bank, Malaysia’s Hajj Pilgrim Fund and its largest state-owned fund manager Permodalan Nasional Bhd will attend the event, the WIEFF says.
Awqaf exist around the world, receiving donations from Muslims to operate social projects such as mosques, schools and welfare schemes. They have amassed huge holdings of real estate, commercial enterprises, cash, equities and other assets.
But in many cases the management of these assets remains primitive; money is often tied up in property or bank deposits that earn miniscule or even zero returns, imposing economic costs on local economies.
India, with an estimated 177 million Muslims, has a large base of awqaf but many of their assets are far from being employed efficiently; their estimated annual income is just 1.63 billion rupees.
Last month, Indian Prime Minister Manmohan Singh inaugurated the National Wakaf Development Corporation, which the Ministry of Minority Affairs established to help management of the properties become more transparent.
“There is now increased government recognition, but also support for this. These things you cannot do effectively without the legislative support,” WIEFF secretary-general Fuzi Abdul Razak told Reuters.
Efforts to strengthen India’s awqaf could conceivably be a precursor to developing an Islamic banking sector in the country; its secular laws still largely forbid the selling of sharia-compliant banking.
“At the highest level of policy-making, they are getting more information and looking at countries which have done Islamic banking successfully. There is increased interest for it now,” said Abdul Razak.
Last year, India’s central bank allowed a firm in the southern state of Kerala to operate as a non-banking financial company following sharia principles, a small step towards developing Islamic finance.
However, such efforts have in the past met strong opposition from bureaucrats in the finance ministry and banking circles. Some politicians, especially from the opposition Bharatiya Janata Party, have said they fear Islamic banking could be used by militants and strengthen the hold of clergy over India’s Muslim community.