The Ruling on Deposits in Banks

Question:
Is what is currently in banks, known as deposits, what is intended by the Shari'ah, given that the bank disposes of the money and the depositor knows this?

Answer:
If the deposit is for investment, it is riba (usury or interest) and is not permissible. However, if the deposit is merely for safekeeping and not for investment, this is permissible out of necessity, because there is fear for the safety of funds, and there is no safe place today other than banks. Therefore, depositing without investment is permissible due to dire necessity. As for if they take it and use it, this is not a deposit; this is considered a loan. You have lent the bank money; this is considered a loan to the bank. A deposit is set aside and not to be disposed of. If they dispose of it, they have spent a debt in my liability, a debt in the bank's liability to you. That is why they call you a creditor and the bank a debtor. Thus, this falls under the category of a loan. You are lending the bank this money, and if you need it or withdraw it, they return your money to you.