Fatwa ID: 09308
Answered by Mufti Nuski Cassim
Question:
Assalamualaikum, I hope this message finds you well.
I read your fatwa based on mufti taqi usmani fatwa, on the conditions to be fullfilled to be sharia compliant while buying stocks
But I have some queries:
1) In some apps, there is a condition that if Revenue of non halal means in Total revenue should be <5% else its not shariah compliant but this condition was not mentioned by mufti taqi usmani( DB), so can we Ignore this condition and solely focus on the conditions laid by Mufti Taqi usmani ?
2) Additionally, there are other conditions mentioned in those app as well like ILLiquid assets to Total assets ratio > 20% , again this condition is also not mentioned nowwhere by Mufti taqi usmani (DB)
These apps say that they work under guardianship/ Guidelines of Darul uloom deoband and many prominent scholars like Mufti saifullah rehmani sahab( DB).
So with these much conditions I’m literally getting crazy , so can I ignore these conditions and strictly follow only Mufti taqi usmani.
Kindly guide please in detail. So that I can share your fatwa with my friends as well
Jazakallahu khair
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
May Allah ﷻ reward you for your sincerity in wanting to invest according to the Shari’ah. Ameen.
You ‘ve asked specifically about the conditions of Mufti Taqi Usmani (حفظه الله) regarding stocks and their compliance.
Mufti Taqi Usmani’s guidelines on stock investment are mainly derived from his work in Islamic finance standards and AAOIFI discussions.
He divides screening into two major categories:
A) Business Activity Screening.
The core business must be halal.
Therefore, investing in conventional banks, alcohol, gambling, adult entertainment etc. will not be permissible.
B) Financial Ratio Screening.
According to Mufti Taqi Usmani’s widely cited parameters:
- Interest-bearing debt must be ≤ 30% of total assets; a company should not be heavily dependent on riba-based loans.
- Non-halal income should be ≤ 5% of total revenue.
If minor impure income exists (ex. bank interest) it must be less than 5% and purified by donating that portion.
Regarding your questions, our advice to you would be to ignore getting overly caught up in all the different conditions and standardizations behind stock investments and to simply use those apps which use the standardization set by Mufti Taqi Uthmani such as Zoya, Musaffa or Wahed Invest.
Additionally, have a look at this article for clarification regarding the conditions set by Mufti Taqi Uthmani (حفظه الله) and others: https://amanahadvisors.com/making-sense-of-the-30-rule-in-islamic-finance/
Only Allah ﷻ knows best.
Written by Mufti Nuski Cassim
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
https://amanahadvisors.com/making-sense-of-the-30-rule-in-islamic-finance/
https://aaoifi.com/