Financing a house construction company with materials it does not possess
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Fatwa number ( 17354 ):
Q: I am an employee and I want to build a house, and I want Al-Rajhi Bank to finance the project with materials. The representative of Al-Rajhi Bank said: We are ready, but you, the owner of the building, go to the suppliers and give them a price list for all the required materials. Al-Rajhi takes it in the form of invoices, and the materials are dispensed according to my request and with the knowledge of the Al-Rajhi Bank representative. For information, the materials are: bricks, iron, concrete, cement, sanitary materials, and electrical materials. Al-Rajhi does not own them, but it says that through this method it will own them. It also says that the Al-Rajhi Board has issued a fatwa on this matter and declared it permissible. What is your opinion on this question? I ask you to issue a fatwa for me.
A: If the store or stores sell the materials to Al-Rajhi Bank,
and this company receives them and then sells them to you, there is no harm in that. However, if you take the materials from these stores, and Al-Rajhi Bank pays their value for you and then recovers it from you with an increase, that is forbidden; because it is a loan with the condition of an increase, and it is riba. And Allah the Exalted said:[Al-Baqarah 2:275] , and the Prophet (peace and blessings be upon him) said: Jami` at-Tirmidhi 1206Hasan (Darussalam) .
Q: I am an employee and I want to build a house, and I want Al-Rajhi Bank to finance the project with materials. The representative of Al-Rajhi Bank said: We are ready, but you, the owner of the building, go to the suppliers and give them a price list for all the required materials. Al-Rajhi takes it in the form of invoices, and the materials are dispensed according to my request and with the knowledge of the Al-Rajhi Bank representative. For information, the materials are: bricks, iron, concrete, cement, sanitary materials, and electrical materials. Al-Rajhi does not own them, but it says that through this method it will own them. It also says that the Al-Rajhi Board has issued a fatwa on this matter and declared it permissible. What is your opinion on this question? I ask you to issue a fatwa for me.
A: If the store or stores sell the materials to Al-Rajhi Bank,
and this company receives them and then sells them to you, there is no harm in that. However, if you take the materials from these stores, and Al-Rajhi Bank pays their value for you and then recovers it from you with an increase, that is forbidden; because it is a loan with the condition of an increase, and it is riba. And Allah the Exalted said:
But Allah has permitted trade and has forbidden interest
وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَاThe Messenger of Allah (ﷺ) cursed the one who consumed Riba, and the one who charged it, those who witnessed it, and the one who recorded it.
لعن الله آكل الربا وموكله وشاهديه وكاتبه
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.