The Savings and Investment System Issued by the National Cooperative Insurance Company
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Fatwa No. ( 21360 )
Q: I ask you, may Allah preserve and protect you, to give me the Islamic ruling regarding the Savings and Investment System issued by the National Cooperative Insurance Company in Riyadh, so that you may illuminate the path for me and for other young Muslims like me. Attached herewith are the full details of the subject (the Savings and Investment System) for which an explanation is sought. Please accept from me and from every Muslim who fears Allah in secret and in public all love and appreciation for the sake of Allah.
A: After the Committee studied the inquiry and reviewed the attached Savings and Investment System, it responded that it is not permissible to participate in the aforementioned system because it contains the forbidden riba (usury or interest) in the Book and the Sunnah; because adding the company’s contribution to the saved amount is considered an interest-based increase, as stated in Article Ten of the aforementioned system and in Clause Seven of the Executive Regulations. Furthermore, the aforementioned system also contains a defective condition, which is the company’s guarantee to each member of his basic capital that he contributed to investments, as stated in Clause (9\5) of the Executive
Regulations; this is because the loss in a mudarabah (profit-sharing partnership) is borne by the owner of the capital
specifically, and the partnership is only in the profit. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: I ask you, may Allah preserve and protect you, to give me the Islamic ruling regarding the Savings and Investment System issued by the National Cooperative Insurance Company in Riyadh, so that you may illuminate the path for me and for other young Muslims like me. Attached herewith are the full details of the subject (the Savings and Investment System) for which an explanation is sought. Please accept from me and from every Muslim who fears Allah in secret and in public all love and appreciation for the sake of Allah.
A: After the Committee studied the inquiry and reviewed the attached Savings and Investment System, it responded that it is not permissible to participate in the aforementioned system because it contains the forbidden riba (usury or interest) in the Book and the Sunnah; because adding the company’s contribution to the saved amount is considered an interest-based increase, as stated in Article Ten of the aforementioned system and in Clause Seven of the Executive Regulations. Furthermore, the aforementioned system also contains a defective condition, which is the company’s guarantee to each member of his basic capital that he contributed to investments, as stated in Clause (9\5) of the Executive
Regulations; this is because the loss in a mudarabah (profit-sharing partnership) is borne by the owner of the capital
specifically, and the partnership is only in the profit. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.