Madarsas turn out portfolio managers

Petrodollar boom drives demand for Islamic scholars

MUMBAI: Mufti Ishtiyaq Azmi, religious scholar, has recently discovered that the market moves in mysterious ways. “One moment things will be calm, even boring. But the next second everyone will be shouting and tearing their hair,” says the young madarsa graduate. “This is strange to us, since the Islamic model doesn’t have such dramatic dips.”

Azmi has spent time poring over balance sheets and observing the mood swings on the trading floor as part of a training programme with Parsoli Corp Ltd, an Islamic brokerage. “As religious scholars, we already know the theoretical principles governing halal (permitted) trading. But to guide Muslims in the real world, we need to know the modern market,” he says. “I am trying to fill this gap.”

Azmi is part of a growing breed of laptop-toting, Sensex-watching scholars who are as likely to advise you on your market worth as your spiritual stock. “Till a few years ago, the tendency was to avoid the market as haram (prohibited),” says Ashraf Mohamedy of Idafa Investments, a Mumbai based firm. The recent interest amongst Muslims in halal investments, however, has prompted several classical scholars to sign up for courses in finance, accounts and even law.  

Like Mufti Arshad Madani, who topped off his religious degree from Saudi Arabia with an MBA from Hyderabad. "The present need is for sharia (Islamic law) consultants who are experts in both fields — religion and finance —and can work in tandem with corporates. This needs broader training than most Indian madarsas can offer," says the scholar, who is soon leaving for London for further studies.

While they are an established phenomenon abroad, in India, the increased possibilities for this role are a fallout of the global boom in oil prices and the heightened interest in Islamic wealth.  "The peaking of oil prices has created huge liquidity in the Gulf region, which India needs for its growth, says Dr Shariq Nisar, Islamic finance expert.

"The strength of our manufacturing sector makes it a draw for Muslim investors, who prefer to put their money into real activity." Post 9/11 and Iraq, he adds, there is also reluctance amongst Muslim investors to park their wealth in the west, where it will not grow as rapidly. Currently,  this liquidity is pegged to be around $700 billion, located in Islamic banks worldwide. "The scope for sharia compliant products that channelise this wealth into the country is huge," says Sudip Bandyopadhyay, director and CEO, Reliance Money, which recently launched India's first sharia compliant Portfolio Management Service (PMS) in association with Parsoli.

According to Mohamedy, the Reliance move has sparked off similar plans in Indian companies, "especially since many already offer such instruments abroad."  Besides the petrodollars,  India itself offers a large reserve of Muslim wealth that can be tapped through sharia instruments, he adds.

"Our Mumbai branch recently did a preliminary market research for a sharia compliant PMS," says Imad Ali of HSBC Amanah, Dubai. "They found that the market was good." Given the right conditions, he says, "many international banks would want to set up sharia divisions in India." All this activity, says Mohamedy, will need a pool of sharia experts to vet agreements and certify products, which India's madarsa graduates hope to supply.

"Many young scholars are interested in the area but are put off by how scary it looks from the outside," says Azmi. The hardest part, he says, is finding a connection between Arabic terms taught in the madarsas and the English words used outside. "Madarsa graduates have to work harder since they lack a background in commerce," adds MB Qasmi of the Markaz-ul-Maarif, a Mumbai training centre. Part of the learning, he says, has been to cultivate a more open attitude towards business. "We learn not to stamp something as forbidden without examining it fully," he says. "If we can help find a workable solution, it is better." Like the recent negotiation he helped supervise to make a car loan interest--free. "I suggested that the bank should purchase the car from the company, adjust the  interest on the final price and then 'sell' it to the client on monthly installments. It worked for everyone." 

These new skills  have changed the way people see the scholars. "When I saw a cleric on the dais of a large meeting, I braced myself for a lecture on saying my prayers," says Ahmad Ali, businessman.  "Instead, I got a pithy guide on managing risk and ethical trading. In corporate terms, you could call it a successful re-branding."

And while the trend is still nascent, says Qasmi, India Inc has started leaving its calling cards in seminaries.  Already, he has been approached by  corporates looking to recruit sharia consultants at high salaries. "For them it is a cheaper option than hiring experts from abroad," he says.  Qualified Indian scholars can expect salaries between Rs60,000 to Rs1lakh, says Zafar Sareshwala, CEO, Parsoli. “This is a big deal for an area where Rs5000 stipends are the norm.”

Parsoli already maintains two sharia experts on its payroll, who are treated to the same corporate perks as their B-school colleagues. "They travel business class, stay in the best hotels and get the respect they deserve," says Sareshwala. "Internationally, this is the norm."

And while adjusting to the power breakfasts and the corporate jargon may only be a matter of time, says Qasmi, any attempts to fit the scholars for power suits are doomed to fail. "This is one of the few places where our beard and topi image is an advantage," he smiles. "No amount of glib talking from slick guys-in-ties will help in convincing the God-fearing customer. Eventually, it will be seeing our faces that will give them peace of mind."
                 
k_taran@dnaindia.net