Can the 5% Impure Income Threshold Ever Be Justified? | Shariah Scholars' Podcast Episode 1

In our very first episode, we dive deep into the 5% Impure Income Threshold in Islamic finance. Is it Shariah-compliant? Can it be justified? 🤔 Join us as we explore the complexities of Shariah screening in stock investments and the challenges of navigating today’s financial landscape.
Our guest, Dr. Farrukh Habib, CEO of Basil Innovations and Co-Founder of Alif Technologies, brings over a decade of expertise as a Shariah scholar, researcher, and fintech specialist. 🧑‍🏫 With a PhD focused on Islamic capital markets, he’s here to break down this controversial threshold and discuss the reasoning, debates, and history behind it.
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Chapters
0:00 Introduction to Shariah Scholars Podcast
2:30 What is Shariah Screening?
8:11 Historical Context of Shariah Screening
14:08 How is it justified?
14:49 What is the actual question?
17:06 What is Fiqh about?
19:15 The Role of Intention
21:46 You have no control
23:09 Inflation-prone currency
25:23 Dr Farrukh's Insights
29:04 Are Joint Stock Companies Musharakah?
31:25 Buying assets with impurity
33:05 Board of directors acting against your will
34:06 Buying mixed Halal and Haram assets together
36:07 Dr Farrukh's Insights
41:57 The principle of subsidiary and secondary
45:05 The legal maxim of the majority
47:20 The concept of Purification
50:22 Dr Farrukh's Insights
56:52 Guidance for the Industry
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💡 Key Topics We Discuss:
What is Shariah Screening? 📊 Learn about the guidelines from major bodies like AAOIFI, S&P, FTSE, and MSCI, and how they each interpret the 5% threshold.
The History of Shariah-Compliant Stock Screening 🕰️ - From the early discussions of Shariah scholars in the 1980s to the modern standards.
Shariah Justifications and Fiqa Principles - Can buying shares in companies with minor non-compliant activities be considered permissible?
Modern Financial Realities 💸 - How do inflation, ownership rights, and capital markets shape Islamic finance decisions?
Practical Application and Solutions 🛠️ - How Fiqh adapts to real-world scenarios, and the importance of balancing Shariah ideals with today’s market dynamics.

[@gmtcoat-se7xh]

This was very useful. Please can you make a video discussing the 30% re interest ratio? Jazakallah khair

[@Lesteri3174]

ما شاء الله As always…Mufti Faraz is the best in explaining in such a way that even people not in finance can clearly understand.

[@muslehmusab]

Jazakumullahu khayran to both of you

[@sabriaconsulting]

Wonderful !! Allahi jazikoum bikheir !

[@aftabalam7216]

very useful

[@moka_3377]

Well what about the interest, how are we jusitfying this?

[@asadshafiq3916]

Very informative jazakAllah

[@BarisTitanX]

Am I correct in assuming you both ascribe to the Hanafi madhhab and thus what you say should be taken as in agreement with the Hanafi madhhab (and not others)?

[@ysooyaalka6172]

Does this also mean that I can eat 95%Halal Salad with 5% bacon in it?

[@king-sal]

You can just remove the bacon .. that’s why there’s purification after you get the stock profits, you take out 5% give it to charity to get rid of the haram, and keep the 95% for yourself

[@mhrosoha]

Asalaam alaykum mufti Saab, can you do an in-depth podcast on Intraday trading please as it also impacts swing trading due to stop losses

[@masifkhan.]

The Messenger of Allah, peace and blessings be upon him, said, “You will surely follow the path of those before you, step by step and inch by inch. If they entered a lizard hole, you would follow.” We said, “O Messenger of Allah, do you mean the Jews and Christians?” The Prophet said, “Who else?” Source: Ṣaḥīḥ al-Bukhārī 3456, Ṣaḥīḥ Muslim 2669

[@patienceetendurance7442]

SalamAleykoum my english is bad, in resume Mufti say is Halal or Haram Etf Sharia Complaint ? thanks you

[@danomal832]

This is soo misleading. No classical scholar ever differentiated between a small or large amount of riba. Any amount has been deemed haram till only rhe last 30 years where these new scholars in the west issuing these fatwas. Majority of classical scholars deem it haram.