Shariah-based investment products set to flood markets

AHMEDABAD/MUMBAI: Shariah-compliant personal investment products are slated to flood the market as exchanges and mutual funds seek to tap Muslim investors who refrain from trading in stocks and commodities. While the MCX-owned National Spot Exchange Limited ( NSEL) plans to market shariah-compliant investment products in a fortnight, SBI Mutual Fund and UTI Asset Management are looking at ways to launch such products in the next few months.

Tata Mutual, Benchmark Asset Management, Taurus Mutual and Sundaram Mutual Fund have ethics-based investment products already. Kotak Mutual, ICICI Pru Asset Management, Reliance Mutual, HSBC and UTI Mutual Fund have a series of shariah-tolerant offshore funds that allow foreign investors to invest in Indian stocks.

NSEL has got its e-series products such as e-gold, e-silver and e-copper shariah-compliant through which retail investors could buy the commodity in demat form at real-time Indian prices. Taqwaa Advisory and Shariah Investment Solutions, a Mumbai-based shariah advisory institution, has certified NSEL’s investment products. “There was a huge demand coming from Muslim investors: waqf boards, masjids, HNIs and traders who wanted products which were shariah-compliant. Initially, we expect volume to increase by 15% to 20%,” said NSEL MD and CEO Anjani Sinha.

He said more products were getting certified. Analysts point out that platinum and agri commodities which have higher liquidity and a deep market could be the other products to be certified. With an investor base of 67,000, NSEL has plans to launch 15 more commodities on its electronic exchange.

(By Madhvi Sally & Shailesh Menon)