Nuqsaf Methodology

The first version of this document (v0.1, on this page) covers sections 1 and 2 only. Sections 3–8 will be added in v0.2 after the first round of peer review.

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1. Scope

1.1 What this methodology covers

Nuqsaf's v1 report is a single-purpose artifact: it identifies interest income and dividend income in a user's conventional bank and brokerage accounts over a 12-month period, and it produces a total dollar amount the user should discharge in sadaqah (charity) as purification.

The methodology in this document governs exactly that process. It answers three questions:

1. What counts as riba for the purposes of Nuqsaf v1?
2. Which transactions in a user's bank data should be flagged as riba-derived income?
3. How is the total purification amount calculated from those flagged transactions?

1.2 What this methodology does NOT cover

Nuqsaf v1 is deliberately narrow. The following topics are outside the scope of this document and outside the scope of the v1 product:

• Zakat. Zakat is an entirely separate obligation based on net assets, not on transaction flow. The fiqh of zakat is complex, varies by asset class, and requires different data (account balances on a specific lunar date, outstanding debts, inventory held for trade, gold and silver holdings, etc.). Nuqsaf v1 makes no attempt to calculate zakat. A user should consult their scholar or a zakat calculator (such as those provided by Zakat Foundation of America or National Zakat Foundation) separately.
• Merchant-level haram classification. Nuqsaf v1 does not assess whether the places you spent money are Sharia-compliant. Spending at a restaurant that serves alcohol, a store that sells pork products, or a conventional insurance provider is not addressed by this methodology. These questions involve significant scholarly disagreement and depend on factors Nuqsaf cannot reliably determine from transaction data alone (e.g., what portion of a grocery store's revenue comes from haram products). A future version of Nuqsaf may address this; v1 does not.
• Investment screening (halal stock screening). The question of whether a specific stock, mutual fund, or index fund is permissible under Sharia requires detailed analysis of the underlying company's business activities, debt ratios, and interest-bearing assets. This is the work of dedicated screening services such as Wahed Invest, Amana Mutual Funds, and the AAOIFI Sharia Standards. Nuqsaf v1 does not perform this analysis. It treats dividend income from conventional, non-screened brokerage accounts as purification-eligible by default (see section 4 in v0.2) on the conservative assumption that the user has not already filtered for halal-only holdings.
• Mortgage and loan structures. The question of whether a specific mortgage product, auto loan, personal loan, or credit card structure is permissible involves detailed review of the contract terms. Products marketed as "Islamic" or "Sharia-compliant" vary widely in quality and scholarly acceptance. Nuqsaf v1 does not attempt to classify the permissibility of specific loan products. It only identifies interest paid and interest received as they appear in transaction data.
• Business income and corporate zakat. Users who own businesses and receive business income through personal accounts should consult a scholar regarding the separation of business and personal zakat/purification obligations. Nuqsaf v1 treats all transactions in a linked account as personal transactions.
• Crypto, foreign currency, and non-bank assets. If a user holds assets outside of the bank accounts they link to Nuqsaf, those are not included in the report. The report covers only what Plaid (the bank data provider) returns for the connected accounts.

1.3 Why v1 is narrow

A narrow scope is a deliberate choice, not an oversight. Nuqsaf's v1 is designed around a single principle: get the most clearly agreed-upon category correct before attempting the contested ones.

• Riba al-nasi'ah (interest on money loans) is the most universally agreed-upon prohibition in Islamic finance. All four Sunni madhhabs agree. AAOIFI standards agree. No credible modern scholar disagrees. The only debates are at the margins (e.g., interest on small amounts, interest paid to non-Muslim counterparties, interest charged in economic necessity). For v1, Nuqsaf focuses on the core case where agreement is total.
• Merchant-level haram classification, by contrast, involves live scholarly debate. Is a restaurant that serves alcohol alongside halal food a haram transaction? Scholars disagree. Is a grocery store that sells 5% pork products haram when you buy bread there? Scholars disagree. Building these into a v1 product would mean making rulings Nuqsaf is not qualified to make.
• Narrowing to riba also narrows the risk to the user. If Nuqsaf's riba detection is slightly wrong, the user purifies a slightly wrong amount — still better than not purifying at all. If Nuqsaf's merchant classification is wrong, the user may feel guilt about transactions that did not require it, or may miss transactions that did. The second failure mode is much worse.

Nuqsaf v2 and beyond may expand scope after v1's methodology has been reviewed, endorsed, and tested against real user data.

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2. Definition of riba

2.1 Riba in the Quran

The prohibition of riba is one of the strongest and most repeated financial rulings in the Quran. The following verses are the primary sources cited in every classical and modern treatment of riba:

Al-Baqarah 2:275

"Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, 'Trade is [just] like interest.' But Allah has permitted trade and has forbidden interest."

Al-Baqarah 2:276

"Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever."

Al-Baqarah 2:278–279

"O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal — [thus] you do no wrong, nor are you wronged."

Al-Imran 3:130

"O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful."

An-Nisa 4:161

"And [for] their taking of usury while they had been forbidden from it, and their consuming of the people's wealth unjustly. And we have prepared for the disbelievers among them a painful punishment."

Al-Rum 30:39

"And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in zakat, desiring the countenance of Allah — those are the multipliers."

The Quranic position is unambiguous: riba is forbidden. The language in Al-Baqarah 2:279 ("war from Allah and His Messenger") is the most severe framing used for any financial prohibition in Islamic scripture.

2.2 Riba in the hadith literature

The Prophetic tradition further clarifies and extends the Quranic prohibition. The following hadiths are widely cited in classical and modern works and are considered sahih (authentic) by the major hadith scholars:

• The Prophet (peace be upon him) cursed the one who consumes riba, the one who gives it, the one who records it, and the two witnesses to it, saying: "They are all alike [in sin]." — narrated in Sahih Muslim, the Book of Transactions.
• "Riba has seventy-three chapters, the least of which is like a man committing incest with his own mother." — narrated in Sunan Ibn Majah and other collections. This hadith establishes the severity of riba relative to other sins.
• The "six commodities" hadith, in which the Prophet (peace be upon him) said: "Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt — like for like, hand to hand. Whoever gives more or takes more has engaged in riba." — narrated in Sahih al-Bukhari and Sahih Muslim. This hadith is the classical basis for distinguishing riba al-fadl from riba al-nasi'ah (see section 2.3).

2.3 Two categories of riba

Classical Islamic jurisprudence distinguishes two categories of riba:

Riba al-nasi'ah (literally "riba of delay") is the form of riba most familiar to modern readers: the predetermined increase on a loan as compensation for the time the borrower has use of the principal. This includes:

• Interest on savings accounts, checking accounts, money market accounts, and certificates of deposit
• Interest on loans (mortgages, auto loans, personal loans, student loans, business loans)
• Interest charged on credit card balances
• Interest income from bonds (government or corporate)
• Interest-bearing peer-to-peer lending returns
• Interest earned on cash held in brokerage sweep accounts

Riba al-nasi'ah is the primary form of riba addressed by the Quranic verses cited in section 2.1. All four Sunni madhhabs (Hanafi, Maliki, Shafi'i, Hanbali) and the Twelver Shia Ja'fari school agree on its prohibition. Modern standard-setters including the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Fiqh Academy of the Organization of Islamic Cooperation (OIC) are in full agreement.

Riba al-fadl (literally "riba of excess") is the exchange of certain commodities for the same commodity in unequal quantities, based on the six-commodities hadith cited in section 2.2. The classical example is exchanging one pound of low-quality dates for half a pound of high-quality dates — both parties have agreed, but the exchange is considered riba al-fadl because the Prophet (peace be upon him) specified that these commodities must be exchanged "like for like, hand to hand."

Modern scholars extend riba al-fadl by analogy (qiyas) to currency exchanges, gold and silver trades, and some derivative instruments. The precise scope of these extensions is an active area of scholarly discussion.

2.4 What Nuqsaf v1 identifies as riba

Nuqsaf v1 identifies only riba al-nasi'ah — predetermined interest income earned on money held in conventional financial institutions.

Specifically, Nuqsaf v1 treats the following as riba al-nasi'ah and includes them in the purification report:

1. Interest income on savings, checking, and money market accounts. Any credit to the user's account labeled as "interest," "interest paid," "APY payment," "interest credit," or similar.
2. Interest income on certificates of deposit (CDs). Periodic or maturity-date interest payments.
3. Interest income on brokerage cash balances. Sweep account interest, money market fund distributions from conventional money market funds.
4. Dividend income from conventional (non-screened) brokerage accounts. See section 4 in v0.2 for the reasoning. The conservative default is to treat dividends from conventional stocks and mutual funds as purification-eligible, on the assumption that the underlying companies include riba-bearing revenue (e.g., interest income on corporate cash, interest-bearing debt) that would disqualify them under AAOIFI screening standards unless the user has actively verified Sharia compliance.

Nuqsaf v1 does NOT identify the following as riba, and does not include them in the purification report:

• Interest paid by the user on loans and credit card balances. Interest paid by the user (as opposed to received) is itself sinful under the same scriptural basis, but it is not "income" and cannot be discharged via sadaqah. The appropriate response to interest paid is tawba (repentance), not purification. Users who pay interest are encouraged to pay off interest-bearing debt as quickly as possible and to consult a scholar about the process of repentance.
• Riba al-fadl in currency exchange, commodity trades, or derivatives. Nuqsaf v1 does not analyze the mechanics of currency trades or derivative instruments in the user's brokerage account. If a user has such transactions, they should consult a specialized scholar.
• Business interest income (if the user receives interest income through a business they own). Business income belongs in a separate accounting framework. Users with significant business activity should not rely on Nuqsaf v1 alone.
• Inflation adjustments, stock buybacks, return of capital, and principal repayments. These are not interest and are not included.

2.5 Summary of the position

The position taken by Nuqsaf v0.1 methodology is as follows:

Conventional bank interest (riba al-nasi'ah) is unambiguously prohibited by the Quran, the Sunnah, and the consensus (ijma) of the Sunni madhhabs. A Muslim who holds money in a conventional bank account and receives interest income is under an obligation to identify that income and discharge it as sadaqah with no expectation of personal reward, because the income itself cannot be retained as lawful earnings. This is the minimum, least-contested case in Islamic finance jurisprudence, and it is the case Nuqsaf v1 addresses.

Nuqsaf v1 does not take positions on contested areas of Islamic finance (merchant-level haram classification, investment screening standards, loan structure permissibility, zakat calculation, crypto, or riba al-fadl). These are deliberately out of scope and will be addressed in later versions of the product after v1's methodology has been peer-reviewed and scholar-endorsed.

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Notes to peer reviewers

Thank you for taking the time to read this draft. The author is not a scholar and depends on your feedback. Specific questions where your review would be most valuable:

1. Are the Quranic citations accurate and complete? Is there a riba verse the author has missed? Is any translation problematic?
2. Are the hadith citations accurate? The author has avoided citing specific hadith numbers because editions vary. Please add numbers from your preferred editions and flag any hadith you consider weak or disputed.
3. Is the distinction between riba al-nasi'ah and riba al-fadl stated correctly? The author's understanding is that v1's scope is limited to the former. Is this the right framing?
4. Is the scope (section 1.2) appropriately narrow? Should v1 cover something it currently excludes, or exclude something it currently covers?
5. Is section 2.4 correct? Specifically: is treating dividend income from conventional brokerages as purification-eligible the right default? Is there a well-known scholarly position against this?
6. Is there a madhhab-specific consideration the author has missed? The author has not yet addressed madhhab choice (that's section 5, coming in v0.2), but if there is a major disagreement between Hanafi, Maliki, Shafi'i, Hanbali, or Ja'fari positions on anything above, please note it.
7. Is the language appropriate? The author has tried to write in plain English without over-simplifying. Is the register right for a general Muslim audience?

Please send feedback to asghar@nuqsaf.com or reply to the email this draft was attached to. Reviews may be as short as a few bullet points or as detailed as a full annotation.

Jazak Allahu khairan for your time.

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End of v0.1 draft. Sections 3–8 will follow in v0.2 after the first round of peer review.