The Bombay Stock Exchange has unveiled a new index of companies that conforms with the Islamic legal requirements, allowing the country’s 140 million Muslims to play the stock market. Sharia law prohibits Muslims from holding an investment portfolio whose stock picks include companies that sell alcohol or tobacco, or businesses that make a substantial portion of their revenues from interest.
The exchange has teamed up with a Mumbai-based Islamic finance company, Tasis, to create the BSE Tasis Sharia 50 index, consisting of the 50 largest and Sharia-observant companies in the BSE 500 including Reliance Industries – a gas, oil and food conglomerate.
It is called the BSE TASIS Shariah 50 index.
Madhu Kannan, chief executive, of the Bombay Stock Exchange, said the move would give Muslims an enhanced role in India’s rapidly expanding economy, while drawing in funds from international investors bound by Sharia law. “The BSE Tasis Sharia 50 index will give Islamic and other socially responsible investors another means to access the Indian market and will help attract pools of capital to India from the Gulf, Europe, and Southeast Asia,” said Kannan.
The new index is also hoped to attract Muslim investment from abroad.
“Before anyone can attract investors, we need to put in place institutional infrastructure, and having an index to track Shariah compliant stock is important,” M.H. Khatkhatay, senior adviser to TASIS said.
The rival National Stock Exchange has a Shariah index, linked to the Standard and Poor’s Shariah-compliant index.
Shariah-compliant investments are available in only a handful of countries globally, particularly those with large or majority Muslim populations.
Source: IslamToday