State Bank of India (SBI) Mutual Fund (MF) announced on 26 November 2014 that it will launch Shariah Equity Fund on 1 December 2014. The fund is aimed at attracting investments from Muslim populations of India.
The fund has been approved by the All India Muslim Personal Law Board, an authority that oversees the observance of Muslim civil laws in India.
With this, SBI MF will become the fourth fund house in India to have an Islamic equity fund after Goldman Sachs MF, Taurus MF and Tata MF.
Also, India became the second country outside the Islamic world where a state-owned bank is offering a Shariah-compliant fund. The UK is the first country who issued sovereign Islamic bonds in June 2014.
About Shariah Equity Fund
• Shariah Equity Fund is a diversified equity fund, including large, mid and small cap companies.
• These funds are basically an investment fund which meets all of the requirements of Shariah law and the principles articulated for Islamic finance.
• The fund must follow a variety of rules, including investing only in Shariah-compliant companies, appointing a Shariah board, carrying out an annual Shariah audit and purifying certain prohibited types of income, such as interest, by donating them to a charity.
• Shares of companies linked to alcohol, tobacco, gambling and casinos and financial institutions that earn interest would be excluded from the fund.
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