This column is the continuation of the last one, in which the Venture Capital model was discussed. Here, it can be narrowed down into the context of Jammu & Kashmir. Not that Profit & Loss sharing and Interest-Free finance are limited to Muslims, but given strong prohibition of usury in Islam, most of the Muslims consider it an obligation. This is why it’s doable in J&K. However, when explained its humane and counter-exploitative characteristics, Non-Muslims have also shown eagerness to it. For instance, 60% borrowers and 40% lenders of Islamic finance in Malaysia are Non-Muslims. They consider it ethical. Moreover, Bible, Granths and other scriptures also prohibit usury.
The Venture Capital model, if successfully implemented in J&K, will alleviate poverty, unemployment and a huge rich-poor schism. The super-rich and the rich with extra stashed cash would always want to invest. They do not have time though. So, they either invest in 3 to 4 ventures, which they can manage, and keep the rest in banks for interest or at the max, invest in real estate. On the contrary, if there is a highly credible Venture Capital company, with diverse professional expertise, these wealthy individuals’ money can be pooled together, and huge business ventures be established. These units will always share profits with the investors, apart from the equity(ownership stake). This was about the benefits to the rich.
As far as the middle-class educated youth is concerned, they would submit their proposals to this VC finance company, and the experts will select the most promising projects and finance them. The entrepreneur, who would have never been able to realize his talent, would get the necessary infusion of cash, and wouldn’t mind sharing, let’s say 50% equity and 50% profit with the investor. The value of the successful company would always grow, so would its profits. This works in favor of the rich investors. At the same time, there would be mushrooming growth of the private sector, which would need to employ people.
Now, some may ask, why not approach the banks for loan, instead? One, you need to have a collateral, and margin money. Two, it’s not going to be on the basis of Profit & Loss sharing. If it’s a new venture, most of your attention would be consumed by the worry of repayment, and if it’s not a success, you’d lose even your house that you might have kept as collateral. The fact that we do not see people doing it successfully is the evidence that a debt-based system is exploitative and anti-poor and pro-rich. This is why God has strongly proscribed it, in almost all the texts revealed by Him. We may not be able to establish an Islamic bank per se, or even an Islamic window in a conventional bank- since these two manifestations are to be included into the Banking Regulations Act (BR) 1949 in the parliament. However, VC Finance Company would be an NBFC (Non Banking Financial Corporation) to be registered with SEBI (Securities and Exchange Board of India). So. the ban on Islamic banking in India won’t impact it.
The appeal is to the wealthy people of ours to step forward and take J&K and its people to new heights, not as a charity but in a symbiotic relationship- equally beneficial to you. I must also add that SEBI has allowed foreign investors in real-estate based businesses too. So, J&K can be built on the money invested by the world, without debt obligations. The government(s) can never change the landscape of our economic depravity. It is us, the private individuals, who need to initiate it on our own. It would also be our contribution to Islam that we did whatever we could, to circumvent the all-dominant Interest-based system. It is beneficial for all of us in Duniya as well as Aakhira’.