Bid to attract investors from West Asia, Southeast Asia
By Siddharth Kumar
With a view to attract more Muslim investors in equity market, the Bombay Stock Exchange (BSE) is launching a new index called the Shariah Index that will consist of 50 stocks strictly compliant with Islamic Shariah law.
The index, to be launched on Monday, will be the first Shariah Index created in the country utilising the strict guidelines and local expertise of a domestic, India-based Shariah advisory board. It will help in attracting pools of capital to India from the Gulf, Europe and Southeast Asia.
The bourse has partnered with Taqwaa Advisory and Shariah Investment Solutions (TASIS) – a leading Indian Shariah advisory firm — to create and launch the BSE TASIS Shariah 50 Index. The barometer consists of the 50 largest and most liquid Shariah-compliant stocks within the BSE 500 Index.
Under Islamic laws, investment is barred in entities that derive huge benefits from interest or the sale of goods and services that are deemed sinful under the Islamic faith. TASIS has adopted financial screening norms that are more conservative than its peers, making the product ideal for Islamic investors seeking investments that adhere to the strict, conservative Shariah compliance norms, the exchange said.
“The introduction of the BSE TASIS Shariah 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,” Madhu Kannan, BSE managing director and chief executive, said in a statement.
According to the bourse, the index will also build a base for licensing for the construction of Shariah-compliant financial products including mutual funds, exchange-traded funds and structured products.
“Shariah Index will unlock the potential for Shariah investments in India,” the statement quoted MH Khatkhatay a senior member of TASIS, as saying.
BSE has the largest number of listed Shariah-compliant stocks in the world. All West Asian countries and Pakistan put together do not have as many listed, according to Shariq Nisar, director (research & operations) at TASIS.
(Courtesy: Tehelka, New Delhi)