The Lajnah (Permanent Committee For Scholarly Research And Ifta’) were asked:
Question:
We have frequently heard Shaykh `Abdul-`Aziz ibn Baz saying that Islamic Banks are permissible, and that their money is Halal (lawful) and unobjectionable. Is this correct? And Allah knows best. The second question involves Islamic banks which in fact and unfortunately twist the Shari`ah (Islamic law) under the claim of offering Murabahah Sale (sale with an agreed profit margin), whereas they are very different from Murabahah Sale, as these banks conduct the same transactions held by the usurious banks, through which they lend traders having no liquid-money in return for fixed interest, and this is incorrect, to be more precise: this is clear Riba (usury/interest), whereas in Islamic banks, these forms of transactions are held under the title of Murabahah Saleas a trader goes to the bank, without having any liquid money, the bank informs him that they will not lend him money depending only on the fact that it is an Islamic bank, rather, they ask him about the goods, their types, purchase them then sell them back to the trader, on condition that he covers all the costs of this transaction: cargo, insurance, and any other transportation related costs. They take ten percent in return, and this is the form of the transaction by which Islamic banks deal with traders who resort to them to ask for liquid money. I would like to have the answer to this, May Allah reward you with good.
Answer:
A: First: It is permissible to conduct transactions with banks that do not deal with Riba, whereas if they do, it is impermissible to carry out any transaction with them, and they are Non-Islamic Banks.
Second: The form of transaction that you have mentioned between the trader and the bank, under the title of Murabahah Sale, is impermissible, because the purchase of the goods by the bank for the trader is unreal, as this bank is not in need for these goods, rather, its objective is gaining the ten percent profit, and we have warned questioners from that several times before.
May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.
Mentioned by
AbdulFattaah Bin Uthman
Abu Fajr
Also the Lajnah (Permanent Committee For Scholarly Research And Ifta’) were asked:
Question:
There are many investment funds in the local bank saying that they apply the Islamic Shari`ah (Islamic law) throughout Murabahah trade (trade with an agreed profit margin), as they purchase and trade in non-prohibited commodities such as minerals, vegetable oils, and cars. Many companies and international foundations trading in non-prohibited commodities, as mentioned before, contribute to the capital of the fund.What is the ruling on participating in these funds, taking into consideration that they take 10 % of the profits in return for their fees, even though they do not guarantee the profit?
Answer:
Invest your money legally in methods other than banks, because the transactions of the banks are based on Riba (usury/interest). Thus, they are not truthful in saying that they invest their money legally, because what counts is what they do in most of their transactions. Thus, you should not trust them. Moreover, dealing with usurious banks implies encouraging and helping them to continue in their prohibited transactions. This is included in the prevention mentioned in what Allah (Exalted be He) says: …but do not help one another in sin and transgression. And fear Allâh. Verily, Allâh is Severe in punishment.
May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.
The Permanent Committee for Scholarly Research and Ifta’
Mentioned by
AbdulFattaah Bin Uthman
Abu Fajr
