The Ruling on Borrowing from the Bank and Tawarruq
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Question:
I, Shaykh, want a loan, so I went to one of the banks on the condition that the bank gives me one hundred thousand, and the interest is twenty-nine thousand, or it gives me wood or iron, and I authorize the bank to sell it. What is the ruling on that?
Answer:
These are two issues. The first issue is that he borrows money from the bank; the bank gives him money as a loan and takes it back with an increase. This is riba (usury or interest), explicit riba. It is forbidden by the consensus of the scholars, and it is not permissible. The second issue is that he buys goods from the bank for a deferred price. He buys goods from the bank for a deferred price, takes possession of them, and sells them to someone other than the bank. He sells them to another person who benefits from their price, and he pays the bank the deferred price for which he bought them. This is called the issue of tawarruq among the jurists, the issue of tawarruq. There is disagreement in it, but the correct view is that it is permissible in case of need, with these conditions: First, the goods must be owned by the creditor, the seller, before the contract. Second, the debtor must take full possession of them. Third, he must not sell them back to the creditor; they must never return to the creditor. He sells them to someone else. If these conditions are met, then this is the issue of tawarruq, and it is permissible in case of need.
The presenter:
May Allah reward you,
I, Shaykh, want a loan, so I went to one of the banks on the condition that the bank gives me one hundred thousand, and the interest is twenty-nine thousand, or it gives me wood or iron, and I authorize the bank to sell it. What is the ruling on that?
Answer:
These are two issues. The first issue is that he borrows money from the bank; the bank gives him money as a loan and takes it back with an increase. This is riba (usury or interest), explicit riba. It is forbidden by the consensus of the scholars, and it is not permissible. The second issue is that he buys goods from the bank for a deferred price. He buys goods from the bank for a deferred price, takes possession of them, and sells them to someone other than the bank. He sells them to another person who benefits from their price, and he pays the bank the deferred price for which he bought them. This is called the issue of tawarruq among the jurists, the issue of tawarruq. There is disagreement in it, but the correct view is that it is permissible in case of need, with these conditions: First, the goods must be owned by the creditor, the seller, before the contract. Second, the debtor must take full possession of them. Third, he must not sell them back to the creditor; they must never return to the creditor. He sells them to someone else. If these conditions are met, then this is the issue of tawarruq, and it is permissible in case of need.
The presenter:
May Allah reward you,
Source
كلمة الشيخ في مرور الطائف — alfawzan.live (20:05)
The Arabic text is a machine transcription of the audio recording.