Attempts of the Kerala administration to establish a Sharia compliant Islamic investment company could shortly be truth with the Kerala high court providing the nod for it.

On Thursday, the State High Court brushed aside a writ appeal lodged by Janata Party president Subramanian Swamy and others against the administration contribution in a firm based on Islamic rules.

Kerala administration was trusting to float an NBFC under the name of Al Barakah Financial Services Company via the publicly owned Kerala State Industrial Development Corporation (KSIDC) in cooperation with some Kerala based capitalists who are opposed to an interest-based system.

Abdussalam Ahamad, director of Al Jamia Al Islamia, an institute specialising in Islamic finance stated, "This is a positive sign and could help bring money to meaningful infrastructure projects while helping earn investors better returns than the traditional banking sector."

"Islamic teaching encourages trading, investment and charitable giving, but frowns on the giving or receiving of interest, or riba, which it categorises as usury. Sharia stipulates against earning fixed returns such as interest, warns against excessive speculation and shares the risk of the business," Abdussalam added.

The temporary order of Kerala high court had previously stayed the state administration order letting KSIDC to invest 11 % share in the projected firm.