The chief minister’s caution came while he was inaugurating the interest-free financial venture in Kannur the other day. The advice came amid speculation that the new venture is an Islamic bank and against the rules and regulations of the Reserve Bank of India (RBI).

“There are certain rules applicable to the banking and co-operative sectors and it is not possible to take a deviation to manage such organizations. Though there are interest-free banking systems in various countries, it is not possible to unilaterally reduce interests,” said the Chief Minister.

The HFCS, which has started the risk-laden venture, is not a credit society. But it has executed many exemplary projects in the production sector. Since it has a reputation to defend, it is of utmost importance that it follows the rules and regulations while venturing into a bigger canvas to avoid complications and interventions in future from government departments, Vijayan added.

The CM’s caution is absolutely in order in the backdrop of what happened when a plan to give interest-free agricultural loans was mooted sometime back. The National Bank for Agriculture and Rural Development (NABARD) had vehemently opposed the plan, Vijayan recalled. Hence his advice to the promoters of the new venture to exercise caution.

Be that as it may, the vicious propaganda that the new venture is meant only for a particular religion or community is malicious and baseless. The new venture has been undertaken for people who are not inclined to invest in interest-based banking establishments.

The promoters of the new venture would have people believe that it won’t be a bank. It will only be a co-operative society accepting investments and shares from people who oppose interest but want to make investments. The society will invite investments from such people and give them shares if they wish so. The fund will be invested in profitable businesses so that they can get dividend as well.

To begin with, the idea is to invest in meat production and processing. (IPA Service)