What is the ruling on the financial cooperatives that are widespread among employees?

The questioner : What is the ruling on the financial cooperatives that are widespread among employees? I mean, each person pays, for example, one thousand riyals, and the money is collected and given to one person each month, and so on, until it goes around to all of them?

The Shaykh : This transaction is permissible if it is based on sincerity of hearts. That is, if one of them takes the thousand and leaves, or writes notes instead of a single note, but then he travels to some country and settles there, what is the position of the group? If the group’s position is that they demand payment from him, then this transaction is not permissible. But if they overlook it, then it is cooperation.

The questioner : Even if one person is responsible for this cooperative, meaning one person undertakes to say: I am responsible for notifying you or delivering it to you?

The Shaykh : What do you mean by "even," my brother? Did you understand the answer? May Allah guide you. I am saying that if this cooperation is based on a foundation, for one reason or another, and the first person who took the thousand left, why did he leave? We do not study the details; the important thing is that he left. Do they demand the difference from him? Because he is the first one who took the thousand. Do they demand it from him, or do they overlook it? If they demand it, then this demand will be a cause of dispute and disagreement among the participating individuals. So, if it is truly cooperation where the one who is able to pay offers what is available to him monthly according to the agreement, and the one who is not able to pay is overlooked, and the one who took his share and then left is also overlooked, then this will be true cooperation for good. As for the first scenario, it is a partnership that invites dispute among the participating individuals.