The Bombay Stock Exchange (BSE) is working with a number of Indian financial firms and banks interested in structuring Shariah-compliant equity fund products linked to its recently-launched BSE Tasis Shariah 50 Index, according to a report by Arab News.
BSE CEO Madhu Kannan would not comment on specific products, but said the index had received a good response. "Our main priority will be to launch domestic and international ETFs/mutual funds off of this index within the next 12 months," he said. "We also are in the process of working with firms to offer structured products."
BSE Tasis Shariah 50 Index is a joint venture between the BSE and the local Taqwaa Advisory & Shariah Investment Solutions (Tasis) aimed at unlocking the potential for Islamic investments in India. The BSE Tasis Shariah 50 index lists the 50 largest and most liquid Shariah-compliant stocks within the BSE500, which includes Indian corporate giants such as Reliance, Bajjaj Auto, Ashok Leyland, Siemens, Tata Global, Bharti Airtel and Hindalco, among others.
Shariah screening is undertaken by Tasis, which has adopted financial screens it believes are more conservative than its peers.
India, with the world's largest Muslim minority of between 150 million and 200 million people, is an untapped market for Islamic investment funds, especially equities, exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and index-linked equity funds and structured products.
Kannan said he is confident of the potential for Islamic finance, and that the main area of growth lies in equity-linked products, including mutual funds, portfolio investments, structured products and portfolio management services. Investment products offered by insurance companies, such as pension plans, also have potential, he said, but they do not yet have the necessary regulatory framework.