Islamic finance and sovereign wealth funds perspectives with focus on Shariah compliant transactions in India

Abstract

Islamic finance, i.e., financing in compliance with Shariah law is an industry which runs into trillions of dollars today. Some of the world's largest sovereign wealth funds have emerged from Islamic countries and are picking up stakes in Western corporate entities – including investment banks and private equity groups. In India, Shariah compliant transactions are picking up. This paper deals with the basics of Islamic finance transactions, sukuk bonds – one of the major Islamic financing instruments, deal analysis using Islamic financing techniques (DP World), the juxtaposition of Islamic finance and private equity, influx of sovereign wealth funds, the India scenario (both with respect to Islamic funds and SWFs) including regulatory aspects and corporate governance aspects of Islamic finance. In most parts, differences between conventional finance and Islamic finance have been covered. Problems with the Islamic finance sector and adoption of Islamic financing practices in global transactions have also been discussed.