Kochi, Thursday, February 03, 2011: The Kerala High Court today gave approval for commencing the operation of an Islamic Bank in State.

The High Court rejected the petition filed by Janata Party President Dr. Subramanian Swamy challenging the sanction given by the Kerala Government for starting the Islamic Bank.

Earlier, the Kerala High Court directed the State government and the Kerala State Industrial Development Corporation (KSIDC) to ensure that a newly formed banking company, said to be based on Islamic principles, did not commence its operations until further orders.

A Bench of Chief Justice S.R. Bannurmath and Justice Thottathil B. Radhakrishnan passed the interim direction on a public interest writ petition by Janata Party leader Subramanian Swamy challenging a government order according sanction for registration of the Islamic finance service company by the KSIDC.

Swamy argued that the Government action was against the country’s secular principle and would lead to similar demands from other religions.
As per the Government order, 11 per cent of the equity would be held by the KSIDC. This showed the identification of the KSIDC with Islam. The setting up of a company with co-ownership of the state was “antithetical” to equal treatment of all religions. The Shariah-compliant operation of the company would also mean imposing prohibitions under the Shariah law, Subramanian Swamy said.