Indian Muslim stock exchange opens for business

Shariah law doesn’t allow practitioners of the Islamic faith to spend money on businesses that make a point of profiting from the generation of interest. In order to work with this constraint yet nevertheless allow business-minded Muslims to develop stock portfolios, the Bombay Stock exchange (BSE), the Taqwaa Advisory and Shariah Investment Solutions, have created a top-50 Islamic stock index. Also referred to as the Bombay Stock exchange TASIS Shariah 50, this index provides Muslims with the opportunity to invest in some of probably the most liquid stocks available on the Bombay Stock exchange 500. They’ll now be able to follow their laws without having to take out substantial personal loans. Source for this article – Shariah Islamic stock index opens in India by MoneyBlogNewz.

Looking at the Islamic stock index shows sector developing

The Wall Street Journal accounts that, even more impressive than the BSE, was the Islamic stock index which went up 0.5 percent. In the Islamic world, it is typical for a lot of trading in Shariah-compliant merchandise like mutual funds that won’t give more interest or additional risk. Shariah finance – in which the Bombay Stock exchange TASIS Shariah 50 is expected to play a major role – is a trillion-dollar industry worldwide, accounts the WSJ. It makes sense that the Islamic stock index is needed, considering about 15 percent of the population in India is Muslim, which is one of the largest Muslim markets on the earth.

An out of balance credit-to-deposit proportion

A recent study by the Reserve Financial institution of India found that while the national credit-to-deposit proportion hovers around 74 percent, it’s only 47 percent for Indian Muslims. The WSJ explains that it means that Indian Muslims borrow lots of cash compared to what is saved in order to maybe buy assets at lower prices than the rest of the Indian population or even start a business. Experts predict that the Bombay Stock exchange TASIS Shariah 50 may help smooth out that ratio for Indian Muslims, but it also remains likely that the Islamic stock index will make India a destination for foreign Islamic finance.

Information from

Debt Steps

debtsteps.com/credit-to-debt-ratio.html

Wall Street Journal

blogs.wsj.com/indiarealtime/2010/12/27/bombay-exchange-hopes-to-score-with-shariah-index/

Some call it ‘financial jihad’

youtube.com/watch?v=Ulp_96DYiqg