Shariah Compliant Stocks In Bangladesh?
Trading in shares of listed stocks is permissible subject to the shares and stocks that are in adherence with the Shariah principles. Stocks screened as per Shariah principles are said to be Shariah compliant shares and trading in such shares is allowed in Islam. The key concept of Shariah Compliant Shares is based on the examination of the stock whether they pass the Shariah standards.
What Are The Shariah Standards?
There are two primary standards to examine stocks and equities to arrive at a list of Halal stocks.
1 – Business activities of listed stocks
Muslims are not allowed to invest in shares of companies that are involved in conventional financial services, Alcohol, Gambling, Pork, pornography, tobacco, Advertising which violates Shariah principles, Media & Entertainment breaching the Shariah principles and trading of gold and silver as cash on the deferred basis.
If the revenue earned from the above mentioned activities exceed 5% of total revenue, trading in shares of such companies is prohibited.
If the revenue from such prohibited activities does not exceed 5% of total revenue, the business sector of the company is believed to be Shariah compliant and further examination is required, which is known as financial screening checks, to deem a company as Shariah compliant.
2 – Financial Screening
Companies passing the sector checks need to be further examined for compliance with the Shariah financial ratios.
There are three Shariah accounting / financial ratios to be checked:
I – Debt Compliance Ratio
Debt / Market Value of Equity (36 month average) < 33 %
II – Cash Compliance Ratio
(Cash + Interest Bearing Securities) / Market value of Equity (36 month average) < 33%
III – Accounts Receivables Ratios
Accounts Receivables / Market value of Equity (36 month average) < 49 %
A company that passes the business sector checks as well as financial ratio check is fit for Shariah compliant investment and is known as a Shariah compliant company/ stock.
Please keep in mind that Shariah scholars have made these concessional rules to ascertain which stocks are Shariah compliant for trading and investment purposes only. It does not mean that the interest bearing transactions or earning revenue from prohibited activities is given approval in Islam to any extent.
Since finding 100% pure stocks that are not involved in any interest based transaction nor earn any revenue from prohibited activities is almost impossible due to the current economic systems across the world – where interest bearing activities and prohibited items cannot be avoided.
Now you might be thinking that if the avoidance of interest and haram business activities is not possible, why the investment has been allowed.
Your concern is valid as HARAM activities are HARAM.
This is the reason, Investment in shares and equities was considered not permissible in accordance with the Shariah Principles and the majority of Muslim communities kept themselves away from the capital market.
Trading in stocks was considered permissible only when the International Islamic Fiqh Academy of the Organization of Islamic Cooperation (IIFA-OIC) passed a resolution in 1992 allowing investments in only those companies whose business activities were fully Shariah compliant. Trading in companies which were earning a small amount of income coming from non-permissible source was not permitted.
This step was welcomed but it was not sufficient to address the investing issues as most of the companies were found to be involved in some non-permissible activity. For example, Software companies. Their main business activities are Shariah compliant but they earn some interest income from the cash deposited with conventional banks. The other example is hyper markets that mainly sells HALAL products but also sell alcohol and pork related products.
Keeping these things in mind, a comprehensive step to present a practical solution for Shariah sensitive investors was needed.
Many Shariah Scholars felt this challenging situation and came up with a proposal to have a criteria to restrict non-permissible activities.
AAOIFI – Accounting and Auditing organization for Islamic financial institutions which was established in 1990 also allowed for the investments in mixed companies with certain conditions.
Thus, the Shariah screening criteria came into existence. AAOIFI developed a Shariah investing criteria which was adopted by other organizations as well. Active Financial institutions in this space having their own Shariah scholars’ board further developed the Shariah equity screening criteria.
The most acceptable and widely followed Shariah screening criteria is the one that the Shariah Board of S&P has developed.
Islamicly App’s Shariah Advisory Board has also developed a similar Shariah Screening criteria for Islamicly App to provide a list of Shariah screened stocks. For detailed Shariah screening criteria please read here: Islamicly Shariah Screening Criteria
Shariah Compliant Stocks in Bangladesh
List Of Shariah Compliant Stocks In Bangladesh
Our Team at Islamicly has examined the Shariah status of stocks listed on Stock Exchanges in Bangladesh and found the below results:
About 40.7% of all stocks listed in Bangladesh are Shariah Compliant. The above pie shows the % of Shariah compliant stocks in Bangladesh. This gives enough scope to the Islamic investors in Bangladesh to trade in Shariah Screened Stocks.
Top 5 Stocks In Bangladesh By Market Capitalization
Our team has also conducted research on the top 5 stocks by market capitalization in Bangladesh and 3 of them (60%) were found to be Shariah Compliant as shown below. This is a positive indication for Islamic investors in Bangladesh.
| Ticker | Name | Sector | Market Cap (BDT) | Shariah Compliance |
| GRAM BD | Grameenphone Ltd | Communications Services | 447.76B | Compliant |
| BATBC BD | British American Tobacco Bangladesh | Tobacco | 215.35B | Not Compliant |
| SQUARE BD | Square Pharmaceuticals Ltd | Biotechnology & Drugs | 204.59B | Compliant |
| WALTONHIL BD | Walton Hi-Tech Industries Plc | Consumer Cyclical | 195.15B | Compliant |
| ROBI BD | Robi Axiata Plc | Services | 146.14B | Not Compliant |
Let Us Give The Shariah Compliance Status Of The Top Stocks in Bangladesh
GRAMEENPHONE LTD
Grameenphone known as GP, is the prime telecommunication service provider in Bangladesh. It has captured 46% market share by providing services to 74 million users.
GP is in a joint venture with Telenor and Grameen Telecom Corporation. Telenor based in Norway owns 55.8% share of Grameenphone and Grameen Telecom Corporation owns 34.2% and the balance 10% is held by the public.
The revenue generated by the company is from the below sources:
1- Revenue from Mobile Communication
2- Revenue from Customer Equipment
3- Other Revenue (commission and other income)
4- Lease Revenue 5- Other Income
Other revenue includes interest income amounting to 0.6 million which is not Islamic and other revenues are considered Shariah compliant.
As more than 99% revenue derived by Grameenphone is from permissible activities, its business sector is classified as Shariah compliant.
The stock has been further examined for financial ratio compliance and all the financial / accounting ratios were found to be within the threshold limits of Shariah equity screening.
The stock is classified as Shariah compliant and its Dividend Purification (DP) Ratio is 0.42%. Whatever income you earn from investing in this stock in the form of dividend, needs to be purified as per the DP Ratio (0.42% of total dividend received). No Purification is required if the income is from capital gain.
BRITISH AMERICAN TOBACCO BANGLADESH
BRITISH AMERICAN TOBACCO listed on Dhaka Stock Exchange as well as Chittagong Stock Exchange is one of the leading companies in Bangladesh. The company is involved in producing tobacco products and cigarettes.
Manufacturing and selling of tobacco and its related products are prohibited in Islam.
The major revenue for this company is from sales of tobacco based products. Hence BAT Bangladesh is Shariah not compliant.
SQUARE PHARMACEUTICALS LTD
This company has a big name in the pharma industry of Bangladesh. This is a Shariah compliant company as it earns major revenue from pharma products only and hence complies with Shariah principles.
The company also passes the financial screening ratios. The company does earn interest income (non-operating) and the same has been considered for calculating the Dividend Purification Ratio that is 3.5% of total income.
Hence, 3.5% of total earnings received in the form of dividends needs to be purified and given to charity.
WALTON HI-TECH INDUSTRIES PLC
Walton Hi-Tech Industries Plc is a leading electronics and home appliances manufacturer in Bangladesh. The company holds a significant position in the market with an annual revenue of approximately BDT 66.37 billion in 2023. Its product portfolio includes refrigerators, air conditioners, and various home appliances.
Walton Hi-Tech Industries Plc generates its revenue from several sources:
1. Revenue from Electronics Manufacturing
2. Revenue from Home Appliances Sales
3. Other Revenue (including commissions and service charges)
We have reviewed the revenue segments and found the Interest revenue to be less than 5% of total revenue of the company. Hence, the company is deemed Shariah-compliant and has successfully met all financial ratio requirements for Shariah equity screening, with its accounting ratios within acceptable limits.
Please read this blog for more information: Shariah compliant status of stocks is Dynamic or static?
Download the Islamicly app for tracking any change in Shariah compliance status of stocks in Bangladesh.
ROBI AXIATA PLC
Robi Axiata Limited is a Bangladesh-based mobile network operator, primarily engaged in offering a broad assortment of networking solutions, such as short messaging services (SMS), general packet radio services (GPRS), international roaming SMS setting aside, multimedia messaging services (MMS), voice greetings and calling services.
ROBI AXIATA PLC generates its revenue from several sources:
1. Revenue from Mobile Communication Services
2. Revenue from Data and Internet Services
3. Other Revenue (including value-added services and digital platforms)
Upon reviewing the company’s revenue breakdown, we found that interest-based income constitutes less than 5% of its total revenue. However, ROBI AXIATA PLC fails to meet the financial ratio requirements for Shariah equity screening, with its accounting ratios exceeding permissible thresholds. As a result, Robi Axiata Limited is NOT classified as Shariah-compliant.
Sector Wise Shariah Screened Equities In Bangladesh
We have examined the Shariah status of listed stocks in Bangladesh based on the sectors they are involved in. The below is the results.
| Sector | Compliant | Non-Compliant | Total |
| Services | 10 | 5 | 15 |
| Consumer/Non-Cyclical | 19 | 12 | 31 |
| Healthcare | 17 | 4 | 21 |
| Consumer Cyclical | 29 | 45 | 74 |
| Financial | 14 | 92 | 106 |
| Capital Goods | 14 | 12 | 26 |
| Utilities | 5 | 5 | 10 |
| Basic Materials | 16 | 17 | 33 |
| Energy | 5 | 3 | 8 |
| Hotels & Motels | 0 | 1 | 1 |
| Chemical Manufacturing | 2 | 0 | 2 |
| Transportation | 0 | 3 | 3 |
| Regional Banks | 0 | 1 | 1 |
| Technology | 5 | 0 | 5 |
| Apparel/Accessories | 1 | 1 | 2 |
| Biotechnology & Drugs | 1 | 0 | 1 |
| Textiles – Non Apparel | 0 | 4 | 4 |
| Food Processing | 0 | 2 | 2 |
| Insurance (Life) | 3 | 1 | 4 |
| Misc. Fabricated Products | 1 | 0 | 1 |
| Insurance (Miscellaneous) | 0 | 3 | 3 |
| Chemicals – Plastics & Rubber | 1 | 0 | 1 |
| Major Drugs | 1 | 0 | 1 |
| Consumer Financial Services | 0 | 1 | 1 |
| Computer Networks | 1 | 0 | 1 |
| Insurance (Prop. & Casualty) | 1 | 0 | 1 |
| Electric Utilities | 1 | 0 | 1 |
| Misc. Financial Services | 0 | 1 | 1 |
| Metal Mining | 0 | 1 | 1 |
| Grand Total | 147 | 214 | 361 |
5 Years Shariah Compliance History Of Listed Stocks In Bangladesh
This is worth mentioning that we have studied the history of stocks and compared the Shariah compliance over the past 5 years. Let us have a look at the below chart:
The above graph shows that the changes in the number of Shariah compliant in Bangladesh over the past 5 years are minimal. It indicates that the Shariah compliant stocks in Bangladesh are stable and they have minimal Shariah compliance risk.
5 Years Shariah Compliance History of Stocks
Capital Market In Bangladesh
Bangladesh has two major stock exchanges:
Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). Both are regulated by Bangladesh Securities and Exchange Commission (BSEC)
1. Dhaka Stock Exchange
The main exchange in Bangladesh is the Dhaka Stock Exchange which was established in 1954. The exchange lists equities, bonds, mutual funds, Indices and other financial derivatives.
The indices that are available on Dhaka Stock Exchange are listed below:
1. DSEX & DS30 developed by S&P Dow Jones Indices
2. DSEX Shariah Index : DSEX Shariah Index Methodology by S&P Dow Jones Indices
3. DSEX Index
It is worth mentioning that DSEX Shariah Index plays a key role in fulfilling the Shariah needs of Bangladeshi Shariah sensitive investors. This Shariah index which has been developed by S&P Dow Jones to provide a Shariah compliant stocks benchmark. The index is the subset of DSE Broad Index and includes all Sharia compliant stocks and excludes non-Shariah compliant stocks from the DSE Broad Index.
S&P Dow Jones provides index management services to Dhaka Stock exchange for conventional index as well as its Shariah index. The list of Shariah screened stocks provided by S&P Dow Jones to Dhaka Stock Exchange is screened by its Shariah compliance partner “Ratings Intelligence” that has more than 20 years of experience in screening stocks in accordance with Shariah principles.
To know more about the DSE Shariah index company list in Bangladesh, you can check here: DSEX Shariah Index Methodology by S&P Dow Jones Indices
2. Chittagong Stock Exchange
CSE came into existence in 1995 where a number of Bangladeshi stocks are listed and trading in shares is conducted through computerized systems. The CSE also provides a Shariah index known as CSE Shariah index that is based on Shariah principles.
About Bangladesh
Bangladesh is a beautiful country housing 162 million people. Bangladesh was part of undivided India and became East Pakistan during the partition of India in 1947. It later separated from Pakistan and became Bangladesh in 1971 Alhamdulillah, the country has 146 million Muslims which is about 90% of the total population of Bangladesh.
Bangladesh shares its borders with India which is the 5th longest land border in the world touching Assam, Tripura, Mizoram, Meghalaya and West Bengal. Melting Himalayan snow and the rivers flowing through the country gives Bangladesh a unique geographic makeup Bangladesh is a secular country that accommodates Islam, Hinduism and Buddhism. Bangladesh is known in the world because of the longest sea beach – Cox’s Bazar and world’s biggest mangrove forest in the Sundarbans.
About Islamicly
Islamicly App is a one stop solution for all your needs of Shariah Compliant Stocks Investments. Islamicly App provides the Shariah compliance information of stocks listed on Bangladesh stock exchange and Chittagong stock exchange as well as globally listed. The data provided by Islamicly App is the result of well researched, accurate information and 20 years of experience in the same domain.
It has a web/desktop version as well that has advanced features, detailed information and much more. In brief, Islamicly will help you in finding Shariah compliant stocks, creating portfolios, knowing stock prices in your local currencies etc. It will also enable you to calculate the purging amount to donate so as to clean your earnings and make them Halal. Islamicly will also alert you once a compliant company turns not compliant. Through this App, you will be a step ahead with the latest information about the Sharia compliant industry with the help of blogs published on a regular basis.
Team Islamicly also conducts AMAs and Webinars for FREE to educate Halal investors about the details of Shariah compliant investing. You are free to ask any questions for any stock or general Shariah investing rules through the forums and our research team will answer your questions. Isn’t amazing this app amazing? Just download on your smart phone NOW and start investing ISLAMICLY!
Islamicly also has a that allows you to manage your Shariah compliant investments on the web and has many more advance features. So, what you are waiting for? Download the app or access the web portal.
