Opinions on Bank Interest
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The first question of Fatwa No. ( 7301 )
Q1: Based on our trust in your knowledge and your mindfulness of Allah, and we do not praise anyone before Allah; we turn to you with a request for a fatwa on a matter that concerns every Muslim, and especially the Muslims here with us in Europe . This is after our attempts to study this matter from the various books of Islamic jurisprudence, and to follow what was mentioned regarding this matter in the various Islamic conferences. Those attempts led the members of our charitable association’s board to two opinions on this issue: namely, bank interest, is it riba (may Allah protect us from it) or not? The first opinion states: that bank interest, whether it is little or much, is riba, and no Muslim should consider it lawful, and especially a charitable association, based on the fatwas of the great scholars in the various Islamic conferences. And even if there is some ambiguity in the matter, the most pious course is to stay away from these interests; acting in accordance with the hadith of the Messenger of Allah (peace and blessings be upon him) in which he says:Bulugh al-Maram 16:32 ... to the end of the hadith. And loans are returned without increase or decrease; what is counted is counted, what is weighed is weighed, and what is measured is measured. The second opinion states: that from the standpoint of preserving the wealth of Muslims from the decrease that befalls it as a result of inflation in its value (the purchasing power of money); therefore, this decrease must be compensated through investment. And this is not feasible; because we are not a specialized financial entity, or that it is kept in one of the banks in exchange for an interest that is less than
the rate of inflation in prices; to compensate for at least part of the loss arising from it. And the following example was given: If Zayd borrowed a certain quantity of dates from Ahmad, and their price at that time was equivalent to 100 riyals, and when the time for repayment arrived, Zayd did not have dates, and he wanted to pay their price, and Ahmad accepted that. So when they asked about their price in the market, they found it to be 150 riyals. And they both knew that their price at the time of borrowing was only 100 riyals. So does Ahmad accept the 150 riyals, or the 100 riyals? And it is that in the early days of Islam, money was of gold and silver, each unit of which had a specific weight, so it is a commodity in itself, having a value that rises and falls according to the rise and fall in prices. Unlike paper money, which is nothing but a scrap of paper, having no value in itself. This is a brief presentation of each of the two opinions, entrusted with the task of researching this problem. And unfortunately, they did not reach the ruling of the religion on the problem of bank interest; due to not finding the evidence for the fatwas of the Islamic conferences and the scholars of Muslims who declared these interests forbidden. And none of them addressed the problem of inflation and the ruling of the religion on it. This is what caused each of the two groups to cling to their opinion. Therefore, we will present these two opinions to the general assembly in the coming month of March, so that it may decide, after voting, what must be taken toward this problem. And in our belief that there is no place for voting in matters of religion, as long as there is someone who knows and is capable of issuing a fatwa; therefore, I hope
that you would be kind enough to send your fatwa by the end of the month of February, and the evidence for the fatwa, which is of the same importance as the fatwa, to clarify and to clarify to the members of the association and to the Muslims the opinion of the religion on this problem, which no Muslim faces, especially in Western countries, and so that the report of the general assembly may be in accordance with what Allah loves and is pleased with. And may Allah reward you with the best reward for us and for Islam.
A1: First: The correct view is that similarity and immediate exchange are obligatory in the sale of ribawi currencies, some with some, if the type is the same. As for if the type differs, it is permissible to sell some with some with a difference in amount, but immediate exchange is obligatory in the place of the contract, except if one of the two counter-values is gold or silver, or paper money that serves as their equivalent, and the other is from something else, then it is permissible to defer one of the two counter-values, as in salam and sales with deferred payment. And on this basis, the increase of one of the two counter-values over the other is from riba al-fadl if the type of the ribawi currency is the same. Second: Allah the Exalted has not compelled us, in the development of wealth and its preservation from decrease, to deposit it in banks, for example, with ribawi interest. And He has not restricted us in the ways of lawful earnings, until we resort to ribawi transactions. Rather, He has legislated for us investment through trade, agriculture, industry, and other means of production and investment; to develop wealth. And He has made clear to us the lawful from
the forbidden. So whoever is able to pursue a way of lawful earnings by himself, let him do so. And whoever is not able, let him give his wealth to a trustworthy, reliable expert in the ways of investment to work for him in it with a known percentage of profit. And this is called: a mudarabah partnership, or a musaqah, or a muzara'ah, according to the difference in types of work. And these ways and the like of them are from the causes of lawful earnings and the preservation of wealth from decrease, by the power and might of Allah, with the fair distribution of profits and losses. So the claim of the second party that there is no way to preserve wealth from decrease except to deposit it in ribawi banks with ribawi interest is incorrect. And on this basis, it is obligatory to repay loans with their like of their type, and this is the requirement of justice. For the rise and fall of the value mentioned are matters whose benefit and harm return to both parties. And the fluctuation of prices in rise and fall was present in the time of the Prophet (peace and blessings be upon him), and it did not change the legal rule that he established for the Muslims; so that they may proceed in their transactions in accordance with it. And the borrower has the right to return the value of the loan at the time of repayment if the owner of the right is satisfied with that; for what is established from Ibn 'Umar (may Allah be pleased with him), that he said: Narrated by Ahmad and Abu Dawud and al-Nasa'i and al-Tirmidhi and Ibn Majah .
Q1: Based on our trust in your knowledge and your mindfulness of Allah, and we do not praise anyone before Allah; we turn to you with a request for a fatwa on a matter that concerns every Muslim, and especially the Muslims here with us in Europe . This is after our attempts to study this matter from the various books of Islamic jurisprudence, and to follow what was mentioned regarding this matter in the various Islamic conferences. Those attempts led the members of our charitable association’s board to two opinions on this issue: namely, bank interest, is it riba (may Allah protect us from it) or not? The first opinion states: that bank interest, whether it is little or much, is riba, and no Muslim should consider it lawful, and especially a charitable association, based on the fatwas of the great scholars in the various Islamic conferences. And even if there is some ambiguity in the matter, the most pious course is to stay away from these interests; acting in accordance with the hadith of the Messenger of Allah (peace and blessings be upon him) in which he says:
Both lawful (Halal) and unlawful things (Haram) are evident but in between them there are doubtful things·and most people have no knowledge about them
إن الحلال بين والحرام بين، وبينهما أمور مشتبهات لا يعلمهن كثير من الناسthe rate of inflation in prices; to compensate for at least part of the loss arising from it. And the following example was given: If Zayd borrowed a certain quantity of dates from Ahmad, and their price at that time was equivalent to 100 riyals, and when the time for repayment arrived, Zayd did not have dates, and he wanted to pay their price, and Ahmad accepted that. So when they asked about their price in the market, they found it to be 150 riyals. And they both knew that their price at the time of borrowing was only 100 riyals. So does Ahmad accept the 150 riyals, or the 100 riyals? And it is that in the early days of Islam, money was of gold and silver, each unit of which had a specific weight, so it is a commodity in itself, having a value that rises and falls according to the rise and fall in prices. Unlike paper money, which is nothing but a scrap of paper, having no value in itself. This is a brief presentation of each of the two opinions, entrusted with the task of researching this problem. And unfortunately, they did not reach the ruling of the religion on the problem of bank interest; due to not finding the evidence for the fatwas of the Islamic conferences and the scholars of Muslims who declared these interests forbidden. And none of them addressed the problem of inflation and the ruling of the religion on it. This is what caused each of the two groups to cling to their opinion. Therefore, we will present these two opinions to the general assembly in the coming month of March, so that it may decide, after voting, what must be taken toward this problem. And in our belief that there is no place for voting in matters of religion, as long as there is someone who knows and is capable of issuing a fatwa; therefore, I hope
that you would be kind enough to send your fatwa by the end of the month of February, and the evidence for the fatwa, which is of the same importance as the fatwa, to clarify and to clarify to the members of the association and to the Muslims the opinion of the religion on this problem, which no Muslim faces, especially in Western countries, and so that the report of the general assembly may be in accordance with what Allah loves and is pleased with. And may Allah reward you with the best reward for us and for Islam.
A1: First: The correct view is that similarity and immediate exchange are obligatory in the sale of ribawi currencies, some with some, if the type is the same. As for if the type differs, it is permissible to sell some with some with a difference in amount, but immediate exchange is obligatory in the place of the contract, except if one of the two counter-values is gold or silver, or paper money that serves as their equivalent, and the other is from something else, then it is permissible to defer one of the two counter-values, as in salam and sales with deferred payment. And on this basis, the increase of one of the two counter-values over the other is from riba al-fadl if the type of the ribawi currency is the same. Second: Allah the Exalted has not compelled us, in the development of wealth and its preservation from decrease, to deposit it in banks, for example, with ribawi interest. And He has not restricted us in the ways of lawful earnings, until we resort to ribawi transactions. Rather, He has legislated for us investment through trade, agriculture, industry, and other means of production and investment; to develop wealth. And He has made clear to us the lawful from
the forbidden. So whoever is able to pursue a way of lawful earnings by himself, let him do so. And whoever is not able, let him give his wealth to a trustworthy, reliable expert in the ways of investment to work for him in it with a known percentage of profit. And this is called: a mudarabah partnership, or a musaqah, or a muzara'ah, according to the difference in types of work. And these ways and the like of them are from the causes of lawful earnings and the preservation of wealth from decrease, by the power and might of Allah, with the fair distribution of profits and losses. So the claim of the second party that there is no way to preserve wealth from decrease except to deposit it in ribawi banks with ribawi interest is incorrect. And on this basis, it is obligatory to repay loans with their like of their type, and this is the requirement of justice. For the rise and fall of the value mentioned are matters whose benefit and harm return to both parties. And the fluctuation of prices in rise and fall was present in the time of the Prophet (peace and blessings be upon him), and it did not change the legal rule that he established for the Muslims; so that they may proceed in their transactions in accordance with it. And the borrower has the right to return the value of the loan at the time of repayment if the owner of the right is satisfied with that; for what is established from Ibn 'Umar (may Allah be pleased with him), that he said:
We used to sell camels for dinars, and we would take dirhams and sell for dirhams, and we would take dinars. So the Prophet (peace and blessings be upon him) said: There is no harm in taking them at the price of the day, as long as you do not separate and there is something between you.
كنا نبيع الإبل بالدنانير، ونأخذ الدراهم ونبيع بالدراهم، ونأخذ الدنانير، فقال النبي صلى الله عليه وسلم: لا بأس أن تأخذها بسعر يومها ما لم تفترقا وبينكما شيء
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.