Under Islamicly's Shariah framework, shares in a listed company may be considered permissible to own and trade when two conditions are met. The underlying business activity and the applicable financial criteria must both satisfy the Shariah screening methodology. That methodology is prescribed by AAOIFI standards and reviewed by Islamicly's globally renowned Shariah Supervisory Board.
Shariah Compliance in India at a Glance
By number of securities
- Shariah-compliant2,792
- Non-compliant2,718
By market capitalisation
- Shariah-compliant55%
- Non-compliant45%
How Islamicly Screens a Stock
Islamicly applies three-level screening to every listed equity, aligned with AAOIFI Shariah Standard No. 21, with a fourth step governing the income that remains. A company must clear all three screens to earn a compliant rating.
| Screen | What It Requires |
|---|---|
| 1 · Business sector | Companies deriving 5% or more of revenue from alcohol, conventional finance, gambling, tobacco, pork, adult content or deferred gold/silver trading are excluded, as defined by AAOIFI and enhanced by the Islamicly Shariah Board. |
| 2 · Debt ratio | Interest-bearing debt must stay below 30% of the 36-month average market capitalisation. |
| 3 · Cash compliance | (Cash + interest-bearing securities) ÷ market value of equity, on a 36-month average, must be below 30%. |
| 4 · Purification | Any residual non-permissible income that was tolerated during the sector compliance check is purified by donating that proportion of dividends to charity. |
Purification applies to dividends, not capital gains.
View Islamicly's full screening criteriaTop 10 Stocks in India by Market Capitalisation
1. Reliance Industries
Reliance Industries is India's largest listed company. It spans oil refining and petrochemicals — anchored by its Jamnagar refining complex in Gujarat — retail through Reliance Retail, and digital and telecom services through Jio Platforms. Reliance earns a small amount of non-permissible revenue from its film and entertainment business, along with interest income, but together these stay below 5% of total revenue. The stock therefore passes the business sector screen. It also passes debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Pass | Pass | Pass |
Reliance Industries is classified Shariah-compliant.
2. Bharti Airtel
Bharti Airtel is one of India's largest telecommunications operators, offering mobile, home broadband, DTH television and enterprise services, and operates across Africa through its listed subsidiary Airtel Africa. Bharti Airtel's digital television services and its interest income are treated as non-permissible, but together they stay below 5% of total revenue. The stock therefore passes the business sector screen. It also passes debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Pass | Pass | Pass |
Bharti Airtel is classified Shariah-compliant.
3. HDFC Bank
HDFC Bank is India's largest private-sector bank, and merged with its former parent, the mortgage lender HDFC Ltd, in July 2023. HDFC Bank is a conventional bank whose revenue comes mainly from interest-based lending and investments, well above the 5% threshold. The stock therefore fails the business sector screen. It also fails debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Fail | Fail | Fail |
HDFC Bank is classified Shariah non-compliant.
4. ICICI Bank
ICICI Bank is one of India's largest private-sector banks, offering retail, corporate and treasury banking, with subsidiaries in life and general insurance, asset management and securities. ICICI Bank is a conventional bank whose revenue comes mainly from interest-based lending and investments, well above the 5% threshold. The stock therefore fails the business sector screen. It also fails debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Fail | Fail | Fail |
ICICI Bank is classified Shariah non-compliant.
5. State Bank of India
State Bank of India is the country's largest bank by assets and branch network, majority-owned by the Government of India. State Bank of India is a conventional bank whose revenue comes mainly from interest-based lending and investments, well above the 5% threshold. The stock therefore fails the business sector screen. It also fails debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Fail | Fail | Fail |
State Bank of India is classified Shariah non-compliant.
6. Tata Consultancy Services
Tata Consultancy Services is India's largest IT services company and part of the Tata Group, providing consulting, software development and business process services to clients worldwide. A review of TCS's revenue from consultancy services and the sale of equipment and software licences found no non-permissible business activity, with interest income below 5% of total revenue. The stock therefore passes the business sector screen. It also passes debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Pass | Pass | Pass |
Tata Consultancy Services is classified Shariah-compliant.
7. Bajaj Finance
Bajaj Finance is one of India's largest non-banking finance companies, lending to consumers and small businesses, and is a subsidiary of Bajaj Finserv. Bajaj Finance is a conventional lender whose revenue comes mainly from interest-based consumer and business loans, well above the 5% threshold. The stock therefore fails the business sector screen. It also fails debt compliance, though it passes cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Fail | Fail | Pass |
Bajaj Finance is classified Shariah non-compliant.
8. Larsen & Toubro
Larsen & Toubro is India's largest engineering and construction group, working across infrastructure, energy, defence and heavy engineering, with listed IT subsidiaries LTIMindtree and L&T Technology Services. L&T's core engineering, construction and manufacturing work is permissible, but it also earns revenue from conventional financing and insurance activities, along with interest income. Together these exceed 5% of total revenue. The stock therefore fails the business sector screen, even though it passes debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Fail | Pass | Pass |
Larsen & Toubro is classified Shariah non-compliant.
9. Life Insurance Corporation of India
Life Insurance Corporation of India is the country's largest life insurer, majority-owned by the Government of India, and listed on the stock exchanges in May 2022. LIC earns its income through conventional life insurance, a non-permissible business activity. The stock therefore fails the business sector screen. It passes debt compliance and cash compliance, but must clear all three screens.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Fail | Pass | Pass |
Life Insurance Corporation of India is classified Shariah non-compliant.
10. Hindustan Unilever
Hindustan Unilever is India's largest fast-moving consumer goods company and a subsidiary of Unilever, with household, personal care and food brands such as Surf Excel, Dove, Lux and Brooke Bond. A review of Hindustan Unilever's home care, beauty and personal care, and foods and refreshment segments found no non-permissible operating revenue, with interest income below 5% of total revenue. The stock therefore passes the business sector screen. It also passes debt compliance and cash compliance.
| Business Activity | Debt Compliance | Cash Compliance |
|---|---|---|
| Pass | Pass | Pass |
Hindustan Unilever is classified Shariah-compliant.
Compliance Status Is Dynamic, Not Permanent
A company classified compliant today can fail next period if it takes on interest-bearing debt, parks cash in conventional deposits, or changes its revenue mix. Islamicly monitors available information daily, while financial screening is reassessed when updated financial information becomes available. Use the Islamicly app to be alerted the moment a holding changes status.
Sector-Wise Shariah Screening in India
Healthcare has the highest compliance rate (71%), followed by Technology (69%). Financial has the lowest: only 32 of its 577 securities (6%) are Shariah-compliant, as conventional banks, lenders and insurers fail the business sector screen.
| Sector | Compliant | Shariah non-compliant | Total | % Compliant |
|---|---|---|---|---|
| Basic Materials | 563 | 438 | 1,001 | 56% |
| Capital Goods | 483 | 339 | 822 | 59% |
| Services | 331 | 412 | 743 | 45% |
| Consumer Cyclical | 386 | 341 | 727 | 53% |
| Financial | 32 | 545 | 577 | 6% |
| Technology | 367 | 168 | 535 | 69% |
| Consumer/Non-Cyclical | 223 | 233 | 456 | 49% |
| Healthcare | 252 | 103 | 355 | 71% |
| Transportation | 65 | 65 | 130 | 50% |
| Utilities | 43 | 46 | 89 | 48% |
| Energy | 47 | 28 | 75 | 63% |
| Grand Total | 2,792 | 2,718 | 5,510 | 50.7% |
About Islamicly
Islamicly is a Shariah-certified app and web platform for screening Shariah-compliant equities. It provides Shariah compliance information for stocks listed on the National Stock Exchange of India (NSE) and BSE, and for companies listed across global markets.
Screening is carried out against AAOIFI-based standards and reviewed by Islamicly's Shariah Supervisory Board, chaired by Dr. Mohamed A. Elgari (Saudi Arabia), with Dr. Muhammad Amin Qattan (Kuwait) and Dr. Nazih Hammad (Canada). Every classification published by Islamicly, including those in this report, is produced under that framework.
On the app and web platform, investors can check the Shariah status of any listed stock, screen an existing portfolio for non-compliant positions, view a stock's historical compliance data, calculate dividend purification amounts, and receive alerts when a holding changes status. Islamicly also offers Shariah-screened model portfolios, digital gold and silver, mutual funds and managed-investment options, and runs free AMAs and webinars on halal investing.
Check the current Shariah status of any Indian stock on the Islamicly app or web platform — screen individual stocks, screen an existing portfolio, calculate purification amounts, and get alerted when a holding changes status.
No comments yet — be the first to share your thoughts.