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.