Investment funds in banks
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Fatwa number ( 21406 )
Q: There are a number of investment funds in local banks that claim to operate in accordance with Islamic Shari'ah through murabahah (cost-plus sale) transactions, where non-forbidden goods such as metals, vegetable oils, and cars are purchased and traded. A number of international companies and institutions contribute to the fund's capital, and the majority of their activities
commercial in non-forbidden materials, as mentioned previously. What is the ruling on participating in these funds, given that they take 10% of the profits as their fee, and given that they do not guarantee profit?
A: Invest your wealth in a legitimate investment outside of banks; because banks are fundamentally based on riba (usury or interest) transactions, their claim that they invest wealth in a legitimate manner is not credible; because the criterion is the majority of their practices, so they are not to be trusted. Moreover, dealing with these riba-based banks encourages them and assists them in continuing their forbidden transactions, and all of this is covered by the prohibition stated in the saying of Allah the Exalted:[Al-Ma'idah 5:2] . And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: There are a number of investment funds in local banks that claim to operate in accordance with Islamic Shari'ah through murabahah (cost-plus sale) transactions, where non-forbidden goods such as metals, vegetable oils, and cars are purchased and traded. A number of international companies and institutions contribute to the fund's capital, and the majority of their activities
commercial in non-forbidden materials, as mentioned previously. What is the ruling on participating in these funds, given that they take 10% of the profits as their fee, and given that they do not guarantee profit?
A: Invest your wealth in a legitimate investment outside of banks; because banks are fundamentally based on riba (usury or interest) transactions, their claim that they invest wealth in a legitimate manner is not credible; because the criterion is the majority of their practices, so they are not to be trusted. Moreover, dealing with these riba-based banks encourages them and assists them in continuing their forbidden transactions, and all of this is covered by the prohibition stated in the saying of Allah the Exalted:
but do not cooperate in sin and aggression. And fear Allah; indeed, Allah is severe in penalty.
وَلاَ تَعَاوَنُوا عَلَى الإِثْمِ وَالْعُدْوَانِ وَاتَّقُوا اللَّهَ إِنَّ اللَّهَ شَدِيدُ الْعِقَابِ
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.