India launches first Islamic equity index

Provides a new benchmark for Islamic investors.

The Bombay Stock Exchange said the Islamic equity index is based on the wide-measure S&P BSE 500 index. The new index comprises the largest 500 companies in the BSE.

It adheres to Islamic finance principles such as prohibitions on investing in alcohol, tobacco and gambling-related businesses.

India's Islamic banking industry has grown slowly since banking rules require lenders to declare the rates of interest they charge customers, putting it at odds with Islamic banks that base their products on profit rates instead.

In order to cater to the 177 million Muslims in India, the largest Muslim minority population in the world, the financial industry is developing investment products that work around this requirement, but political and legal obstacles have delayed progress.