India launches sharia stock index for Muslims

[StingRoy]

India launches sharia stock index for Muslims

MUMBAI: India’s Bombay Stock Exchange launched a share index of sharia-compliant companies on Monday in an attempt to open stock-trading to more Muslims.

The BSE TASIS Sharia 50 consists of the largest and most liquid sharia-compliant stocks within the BSE 500 index.

All the companies have been vetted to ensure they comply with Islamic law, which does not allow investors to put money into firms that benefit from interest or the sale of sinful goods such as alcohol, tobacco or firearms.

The managing director and chief executive of the Bombay Stock Exchange, Madhu Kannan, said the index would attract Islamic and other “socially responsible” investors both in India and overseas.

“This index will create increased awareness of financial investments among the masses and help enhance financial inclusion,” he said in a statement.

“The index will also build a base for licensing for the construction of sharia-compliant financial products, including mutual funds, ETFs (exchange traded funds) and structured products.”

Several studies have found that the majority of India’s 160 million Muslims have been excluded from the country’s formal financial sector due to the restrictions imposed by Islamic law.

Companies included in the index have been screened by Taqwaa Advisory and Shariah Investment Solutions (TASIS), an Indian Islamic finance company based in Mumbai, whose board members include Islamic scholars and legal experts.

TASIS said the index would “unlock the potential for sharia investments in India”.

“Bombay Stock Exchange has the largest number of listed sharia-compliant stocks in the world,” said Shariq Nisar, director of research and operations at TASIS.

“All Muslim countries of the Middle East and Pakistan put together do not have as many listed sharia-compliant stocks as are available on the BSE.” Stocks will be reviewed every month to ensure continued compliance. Any stocks that do not meet the criteria will be removed. – AFP

 

[brahmastra]

so, it will bring some more money to the market. what else?

 

[RoYaL~GuJJaR]

-----NOT NEEDED-----

 

[StingRoy]

I am not sure about the rationality behind such sharia specific investments within India since anyone is free to invest in the Indian stock markets.

But one thing I see is that the 'Sharia' tag will encourage the muslims in India and money from the middle eastern companies to invest in these stocks and MFs.

 

[EjazR]

This comes under the "socially responsible" investors category. Its not restricted to only muslims, non-muslims can invest as well.

Still I was surprised by this part though:
All Muslim countries of the Middle East and Pakistan put together do not have as many listed sharia-compliant stocks as are available on the BSE

 

[justanobserver]

“All Muslim countries of the Middle East and Pakistan put together do not have as many listed sharia-compliant stocks as are available on the BSE.”

 

[MYSTIC]

They have just put a separate index for them. Sharia compliant companies have been in India for a long time.

 

[KS]

Who cares for the name as long as it brings the greenbacks into the system ??

 

[PRACTICAL PATRIOT]

i am actually against any discrimination based on region or religion within country
but if thats helping country then fine with me. i just hope people dont make religious problems and differences out of it

 

[SpArK]

INDIA LAUNCHES SHARIAH STOCK INDEX


The Bombay Stock Exchange has launched India’s 1st index of companies compliant with Islamic law, or Shariah in an effort to bring more of the country’s 175M Muslims into mainstream finance, and to attract investment from foreign Shariah-abiding funds.
Shariah finance has become a Trillion-Dollar global business, most notably in the Gulf. But in spite of India’s sizeable Muslim population, it has not yet taken off in south Asia. The creators of the new index, called the BSE Tasis Shariah Index and launched Monday, hope to change that.

The index is made up of the 50 largest Indian companies whose operations are deemed to be consistent with Shariah, meaning that they do not derive significant profit from interest payments, or sell products or services such as tobacco, alcohol or weapons, which are considered in the Islamic faith as sinful.

Produced in collaboration with Taqwaa Advisory and Shariah Investment Solutions (Tasis), the index includes some of India’s market leaders such as conglomerate Reliance Industries (BO:RIL), IT services provider Tata Consultancy Services (BO:TCS) and the telecom company Bharti Airtel (BO:BHARTIADTL) .

It will be the 1st Shariah index created in India using the strict guidelines and local expertise of a domestic, India-based Shariah advisory board.

The Bombay Stock Exchange’s rival, the National Stock Exchange, has compiled a list of Shariah-compliant stocks, but it has not packaged them into an index that enables investors to track their performance on a rolling basis.

The index represents the latest move in India’s long-running drive to promote financial inclusion, giving more Indians access to loans, insurance and investment products from the formal financial services sector.—Paul A. Ebeling, Jnr.

Ebeling Heffernan Live Trading News Economic and Investment Research Journal Asia

 

[Nagraj]

well good move by GOI.
there are many muslims who will feel encouraged to invest in stock market . this will enable a vast majority of people to gain from indian recent economic successes.
well personally i have no clue what "exactly" is relationship of sharia and stocks .
can any one thow some light????

 

[december]

If it bring more people to invest ,more money will flow to market so its good for indias economy
as i understand it is not restricted to muslim.......so it is not religious based...
this helps to take all sections together on indias journey to become a global power

 

[greatsequence]

Shariah economics is increasing day by day. Its pretty good in Pakistan as well. The system is still evolving. I still dont know how "Islamic" it will be because through out the world there are organisations who will say they are "Islamic" but they are not.
One reason could be that banks and organisations based on sharia were almost uneffected by the recent economic crunch. Nevertheless its always good to have alternates of everything.

 

[SQ8]

What is "significant profit from interest"?

Interest..whether .00000000000000000001%
or .30%... is still interest.. and Haram..
I suppose a special clause must be included on what the interest is derived out of...

 

[justanobserver]

Shariah economics is increasing day by day.

AFAIK It's not Shariah in the economic sense.

It's Shariah in the moral sense because it's a list of stocks that aren't related to alcohol, tobacco, weapons etc. (which are not permitted as per Islam).

imo It's also great way to boost investment from middle east and other countries too.