28 Dec 2010

New stock index launched for Islamic companies

3:23 pm on 28 December 2010

The Bombay Stock Exchange in Mumbai has launched a new index, which consists of companies that meet the Islamic legal code.

The Tasis Shariah 50 was formed using guidelines from an Indian Shariah advisory board.

Studies have found that most Muslims in India are excluded from the country's formal financial sector. That is because Islamic law does not allow investment in companies that sell goods such as alcohol, tobacco or weapons. Neither does it allow investment in companies that derive significant profit from interest.

The index is intended to be the basis for other Shariah-compliant financial products.

BSE chief executive Madhu Kannan said the new index would attract Islamic and other socially responsible investors both in India and overseas.

The BBC reports that companies included in the index have been screened by Tasis, which is based in Mumbai and whose board members include Islamic scholars and legal experts.

Officials say stocks will be reviewed every month to ensure they continue to meet the criteria - any that do not will be removed.