FAQs

Question

Can I invest in a company with high interest earnings and later on do purging to clear all such impure incomes.

Answer

Shariah Boards across the globe have individually set certain standards of tolerance for interest income, based on the collective understanding of members of the concerned Shariah Boards. In the case of TASIS the Shariah Board has limited the tolerance ratio for interest income to 3% of Total Income (which is perhaps the most stringent globally) based on empirical studies on the Indian stock market over many years.
It seeks to keep the tolerance level to a minimum, while yet providing investors a reasonable choice of viable investment-grade Shariah-compliant equities. Hence, investors are required to remain within this limit if they wish to be Shariah compliant, as the ideal situation should actually be zero. The tolerance allowed is already taking into account the situation in India, where safe, interest-free (no tolerance) investment options are quite rare.
It should be realized that knowingly investing in avenues which involve high interest earnings when options of investing with less interest, are available, goes entirely against the spirit and rationale of purging. Purging is actually a reparation for an infringement committed due to difficult circumstances. Hence the attempt should be to keep the infringement to a minimum, not aggravate it knowingly.



Allah Knows best.