Quick Guide: Shariah Compliant Companies in India
Quick Guide of How to Find out Shariah Compliant Companies?
Are You Muslim? And Do you want to invest in the Indian Stock Market according to the Shariah Compliant Way? Than Here is a Good news for you. In this article, I will tell you that how to identify the Shariah Compliant Companies in India? But before that, Read the fact about Indian Stock Market Here.
While Shariah compliant investment avenues are now becoming available in most
countries, India has not seen large-scale development.To gauge the scope of Islamic
investment opportunities in the Indian stock market, it is imperative to examine
stocks that conform to Islamic Shariah principles
"Out of 6,000 BSE listed companies, approximately4,200 are Shariah compliant. The market capitalization of these stocks accounts for approximately 61% of the total market capitalization of companies listed on BSE.”
This figure is higher even when compared with a number of predominantly Islamic countries such as Malaysia, Pakistan and Bahrain. In fact, the growth in the market capitalization of these stocks was more impressive than that of the non-Shariah compliant stocks.
The software, drugs and pharmaceuticals and automobile ancillaries sector were the
largest sectors among the Shariah compliant stocks. They constitute about 36% of
the total Shariah compliant stocks on NSE. Further on examining the BSE 500 the
market capitalization of the 321 Shariah compliant companies hovered between 48%
and 50% of the total BSE 500 market capitalization.
Quick Guide: How to Identify Shariah Compliant Companies?
The following are the Shariah Investment Guidelines -
Shariah Prohibited Companies (The Investment in Companies in the Following Businesses is strictly prohibited according to Shariah Laws.)
- interest bearing financial institutions
- conventional insurance companies
Following Industries’ Stocks are Permitted - (The Investment in the companies of following sectors is permitted by Shariah Guidelines. However, you will have to check the Debt of these Companies.)
- Oil & Gas
- Tele Communication
From those of Permitted Sectors, The Companies should fulfill the following 3 Criterias.
01) The total interest bearing debt of the company at any point in time should remain below one third of its average market capitalization during the last twelve months.
02) Its aggregate of account receivables should remain below 45% of total assets.
03) If company has any interest bearing income it should not be more than 10% in
So What are you waiting for? Find out the Shariah Complaint Companies in India from the above Guidelines.