Screening Methodology
Three Levels of Shariah Compliance for Ethical Investing
Our mission is to empower Muslims worldwide to invest with confidence without compromising their faith. We apply a multi-tiered, AAOIFI-aligned screening framework so you can choose your preferred level of taqwa and stay aligned with Shariah.
Why Shariah Screening Matters
Not all listed companies are permissible. Some operate in haram sectors, others carry riba-based liabilities or earn impermissible income.
- Avoid clearly haram businesses
- Minimize exposure to financial violations
- Receive guidance on purification of doubtful income
What Investors Ask
- “Is this stock halal?”
- “How can I avoid haram income and sectors?”
- “Can I invest with a higher level of taqwa?”
3-Tiered Financial Screening for Stocks
Grounded in AAOIFI benchmarks with stricter thresholds where appropriate.
Tier 1 · Baseline
- Interest-bearing liabilities ≤ 33% (AAOIFI)
- Receivables and cash/cash equivalents within accepted bounds
- Non-halal income < 5%
Tier 2 · Conservative
- Tighter interpretation of financial ratios
- Lower tolerance for interest-linked exposures
- Stricter view on doubtful income sources
Tier 3 · Taqwa
- We adopt ≤ 30% for riba liabilities (stricter than 33%)
- Non-halal income as low as 1%
- More conservative stance across all ratios
| Criteria | Debt Limit | Cash Limit | Receivables | Haram Income % | Excluded Sectors |
|---|---|---|---|---|---|
| ITQAN | ≤ 30 | ≤ 30 | ≤ 49 | ≤ 5 | All haram sectors |
| EHTIYAT | ≤ 25 | ≤ 25 | ≤ 33 | ≤ 3 | All haram sectors |
| TAQWA | ≤ 15 | ≤ 15 | ≤ 25 | ≤ 1 | All haram sectors |
Balanced compliance ideal for investors seeking mainstream halal compliance.
- Debt and cash exposure up to 30%
- Non-halal income up to 5% (requires purification)
- Widely accepted among Islamic financial scholars
- Practical for diversified portfolios
For investors who want extra care and lower tolerance for doubtful income.
- Tighter thresholds: 25% debt, 3% non-halal income
- Purification still required
- Reduces exposure to grey areas
For spiritually focused investors who avoid even minor doubts.
- Very strict limits: 15% debt, 1% non-halal income
- Purification recommended
- Designed for those who follow a more conservative fiqh opinion
Business Screening for Stocks
Companies primarily engaged in haram sectors are automatically marked Non-Compliant.
Alcohal
Tobacco
Pork
Casinos, Resorts and Gambling
Broadcasting
Advertising Agencies
Banks and Interest Based Financial Institution
Entertainment & Movies (18+)
Defence & Weapons
Interest Based Real Estate
- Conventional finance (interest-based lending)
- Alcohol, gambling, pork, adult entertainment
- Tobacco and recreational drugs
- Weapons, defense, or other prohibited industries
Understanding the Ratios
- Riba limits: Interest-bearing liabilities must not exceed a third (33%); we adopt 30% in stricter screening.
- Receivables: Avoid excessive unpaid, interest-based transactions.
- Cash/Cash equivalents: Avoid interest-earning deposits.
- Non-Halal Income: Less than 5% (or as low as 1% in Taqwa).
Dynamic Monitoring & Updates
- Monitor financials quarterly and annually
- Update stock status as reports change
- Notify users via app alerts and dashboard flags
Why Hudood Is Different
- 3 levels of compliance (choose your taqwa)
- Auto-purification calculation
- Multi-country coverage (India, USA, Saudi, UAE & more)
- Real-time alerts and updates
- Built with taqwa, not just tech
Start Screening Today
Filter by your preferred taqwa level, exclude haram sectors instantly, receive purification guidance, and access global halal markets.
Filter Stocks