A loan from the bank with interest and the issue of tawarruq
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Question:
This questioner, Abd al-Rahman from al-Bahah, says: Honorable Shaykh, I borrowed a sum of money through the bank, and the bank imposed riba (usury or interest) on me. The transaction was only on paper, and I did not see the commodity. What is the ruling in this case, knowing that I still have approximately thirty thousand riyals remaining from the loan I took from the bank? Is it lawful or forbidden? May Allah grant you success.
Answer:
This is a sale, not a loan. If he bought a commodity from the bank at a deferred price to meet his current need, then sold it and benefited from its price, this is what is called the issue of tawarruq (a commodity sale used to obtain cash), and there is scholarly disagreement regarding it. However, according to the opinion that it is permissible, he must buy it and take possession of it, then move it from the seller’s location and sell it in another place. These are the conditions: he sells it in another place, removes it from the bank, and sells it to someone else. These are the guidelines and conditions of the issue of tawarruq. As for if the matter is just signing a piece of paper, or if they tell him, “We have entrusted it to you,” and he does not see the commodity, this is a fraudulent deception, and it is a deception regarding riba. They give him dirhams for dirhams with an increase, in the name of a non-existent and unreal commodity. Yes.
The presenter:
May Allah reward you with good.
This questioner, Abd al-Rahman from al-Bahah, says: Honorable Shaykh, I borrowed a sum of money through the bank, and the bank imposed riba (usury or interest) on me. The transaction was only on paper, and I did not see the commodity. What is the ruling in this case, knowing that I still have approximately thirty thousand riyals remaining from the loan I took from the bank? Is it lawful or forbidden? May Allah grant you success.
Answer:
This is a sale, not a loan. If he bought a commodity from the bank at a deferred price to meet his current need, then sold it and benefited from its price, this is what is called the issue of tawarruq (a commodity sale used to obtain cash), and there is scholarly disagreement regarding it. However, according to the opinion that it is permissible, he must buy it and take possession of it, then move it from the seller’s location and sell it in another place. These are the conditions: he sells it in another place, removes it from the bank, and sells it to someone else. These are the guidelines and conditions of the issue of tawarruq. As for if the matter is just signing a piece of paper, or if they tell him, “We have entrusted it to you,” and he does not see the commodity, this is a fraudulent deception, and it is a deception regarding riba. They give him dirhams for dirhams with an increase, in the name of a non-existent and unreal commodity. Yes.
The presenter:
May Allah reward you with good.
Source
نور على الدرب - الفوزان - 03/153 — archive.org (17:56)
The Arabic text is a machine transcription of the audio recording.