There is no 'interest tolerance level' in Islam
Fatwa No: 243805

  • Fatwa Date:11-3-2014 - Jumaadaa Al-Oula 10, 1435
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I am interested in investing in an Indian Stock Market Called "BSE Tasis Shari'ah 50" Which they claim has the strictest possible Shari'ah compliance norms. Their Shari'ah screening includes: Business screening: Ensures that companies are carefully selected in compliance with Shari'ah and are in businesses that do not harm society per Shari'ah law. Interest activity screening: Ensures that companies involved in interest-bearing activities are within Shari'ah tolerance levels. My question is: does such an interest tolerance level exist in Islam which is mentioned in the second point?


All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

We have already clarified the ruling of dealing in the stock exchange and have clarified the kinds of permissible, forbidden and mixed shares in Fataawa 85042 and 92713.

As regards investing in the stock exchange index, if you mean the figure that is meant to show the size of the change in a particular stock market, then this is not permissible pursuant to the resolution 7/1/65 of the Islamic Fiqh Committee in its seventh session in Jeddah, Saudi Arabia, in 1992 (1412 Hijri) which reads as follows: "3 – Dealing in the index: The index is a number calculated in a special statistical manner; it is intended to show the extent of the change in a particular market and some sales are completed over it in some international markets. It is not permissible to buy or sell the index because it is pure gambling as it is selling something imaginary that cannot exist."

If you mean something else, then please clarify that to us.

As regards Riba interests, then they are prohibited whether they are small or large as we have stated in Fataawa 3522 and 196841.

However, if you mean that the activities of some companies are permissible but these companies borrow money with Riba, then this renders them among the companies whose income is mixed, and buying their shares is a matter about which scholars held different opinions as clarified in the Fataawa that we referred you to at the beginning of the answer.

Allaah Knows best.

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