Shariah compliant Islamic Banking & Investments: Trade Invest following Shariah Principles

There has been a recent interest in Islamic Banking and Shariah Compliant Investments. The market is huge and so is the potential, because it is learnt that there is a large community which is still away from the investments business because the conventional investments and business schemes are not considered to be Shariah compliant. Hence, the new concept of Shariah compliant Islamic Banking and Investments is gaining interest. Is this article, we discuss the Shariah compliant Islamic Banking & Investments and also cover the details about the investment products, mutual funds, etf's available for Shariah compliant Islamic Investments
- Aligarh Muslim University recently started a course focussed on Islamic banking
- Many western countries including UK and USA have Islamic Banking

- Few selected Indian Banks operating in regions like Gulf and Middle East have Sharia Banking operations for the respective clients

Shariah compliant Islamic Banking & Investments

If interest prohibited, how do Sharia Compliant Islamic Bank make profit?
Interest is prohibited, but service charges offer a way to make profits. The Islamic Banking systems enables debit card and personal credit lines system, so the charges for them.

What are the financial products available under the Sharia Compliant Islamic Banking
There are a lot of products available under Islamic Banking system:

- Islamic Shariah Compliant Equity Investments and Islamic Mutual Funds/Sharia Mutual Funds: These are the investments in Equity shares of companies which are compliant with Shariah Laws. See more details on Islamic Mutual Funds: Sharia Mutual Funds

- Islamic ETF or Shariah ETF Exchange Traded Funds: These are ETF or Exchange Traded Funds which track an index which is Shariah Compliant. BSE recently launched the TASIS Index which is Shariah Compliant, see details BSE TASIS Shariah 50 Index: India's Shariah Index for Islamic Investments

- Islamic Debt Instruments: They have some assets as a backup and are generally available as bonds

- Islamic Convertible Bonds: Bonds which are based on investments in Shariah compliant company shares

- Shariah Compliant Islamic bonds: These are bonds which follow the Shariah laws for investments. Last year, one major development happened in this space in Europe as Germany issued 5 year long Islamic bonds on a floating rate basis. The government owned real estate and properties act as a collateral for these bonds and since interest is prohibited in Islamic Bonds, the investors are paid "rent" for investments in these Islamic Bonds.

What Shariah compliant Islamic Investments are available in India?
Benchmark Asset management company has recently lauched the Shariah Bees - its an ETF or Exchange Traded fund which tracks are tries to match the performance of the underlying index called the S&P CNX Shariah Nifty Index. This index is from NSE and the Shariah BeeS ETF is listed and can be traded in real time on NSE. (See Shariah Bees ETF India: Review: Trade as per Shariah Principles
There are also a few shariah compliant mutual funds available from the following asset management companies:
- UTI Asset Management
- Reliance Mutual Fund
- Way2Wealth
- Edelweiss Mutual Fund
See Islamic Mutual Funds: Sharia Mutual Funds
The market for Shariah compliant investment or islamic banking is big. There lauch of indices like S&P CNX Shariah Nifty Index and BSE TASIS Shariah 50 Index and the corresponding ETF's and mutual funds based on Shariah principles shows the growing interest and the market opportunities which exist for this stream.