SBI puts off Shariah Equity Fund, Congress says politics behind move

NEW DELHI: SBI Mutual Fund has deferred plans to launch a Shariah Equity Fund, a move which Congress member K Rahman Khan alleged was taken due to political reasons. The fund house floated by the country's largest bank, however, denied the allegations. "We had a plan but it was deferred it was a commercial call. The plan is to be re-examined but it has not been done yet," a senior SBI executive said.

On Wednesday evening, Khan alleged in Rajya Sabha that the decision to shelve the plan was taken last December, and was on account of "an important functionary" writing to PM Narendra Modi opposing the proposed equity fund. Though he claimed to have the letter, he declined to name the functionary . The SBI executive conceded that the decision to defer the fund was taken on December 1, when it was to be launched.Khan said this happened even after the Reserve Bank of India was "convinced" about the feasibility of such a scheme, which could bring Rs 50,000 crore of deposits.

The proposed fund was to invest in stocks that are part of an index, which comprises shares that are compliant with Shariah laws. Instead of paying interest, the scheme was to pay dividend.