Discussion regarding the ruling on dealing with the Islamic bank.

The questioner : Returning to the beginning—my dear brothers—I hope you will be kind to us and have a little patience. The topic raised before lunch regarding banks, specifically the Islamic bank, was not organized by the brother who asked the question onto a paper for the Shaykh to address. Therefore, I spoke with my teacher, Shaykh Abu Khalil, about the Islamic bank, which has become a point of criticism for us as Muslims because it bears the name of Islam. We are criticized by Muslims who are not committed, and by the Christians and the leaders of disbelief in the country. This bank has now offered its shares for subscription and sale in the Amman Stock Exchange. That is one thing. On the other hand, this bank has also begun to accept the funds of Muslims to invest them in projects, on the condition that these projects return a profit to the investor. There are many opinions from many scholars regarding these projects; some support them and some do not, without relying on a Shari'ah text. The topic of the Islamic bank has been raised in newspapers, on television, and in discussion circles with many Muslim scholars, as well as many mathematicians, sociologists, and others, who have permitted it.
However, this bank, which has now become clear in its experience and performance to every observer, has left us in doubt about this matter. We are pressing with the question, and I hope the honorable professor will bear with me personally and with my persistence, because there are those who press me. Personally, I have not been at all comfortable with the idea of the Islamic bank, because I have not found anything that justifies my comfort with this idea or with the offerings of this bank, given that it represents Islam and bears the word "Islamic," and it is now establishing several branches throughout the Arab and Islamic world.
Now, if the Shaykh allows me to raise a point on which I stand firmly, it is that the Islamic bank has begun to practice a new operation: participating in government projects that exist throughout the Arab and Islamic world. It participates with deposited funds, whether these funds are in its capital account or in the accounts of depositors who are participating in these projects. The projects established in the Arab world—I say the Arab world and not the Islamic world, because it is not governed by Islam, and you know that—these funds enter these projects through usurious means. The evidence for this is that the projects themselves borrow from international disbelieving banks to develop and establish the projects. So how can the Islamic bank contribute and participate in these projects with funds called Islamic funds or funds belonging to Muslims like us? This is what I can say after knowing fully that the Islamic bank has participated in projects in this country with amounts exceeding many millions.
I hope to receive the answer, and if the professor is pleased to postpone it to another time so that the question and knowledge about the Islamic bank, its objectives, and its system may increase, that does not prevent him from being kind to us now with what will please us all.

The Shaykh : By Allah, the truth is that the research on the Islamic bank is long and has many branches. Therefore, I wished that the question would be limited so that the answer would be as well. The dealings of the Islamic bank are of many types, and each dealing has its ruling in the Shari'ah. You have now touched upon an example, and this example may, as I say, be among the evidence that the Islamic bank does not deal in purely Islamic transactions one hundred percent. And I say that this example is indeed evidence of that, and the evidence for that comes from a question I have: You indicated, indeed you stated, that there are funds in which non-Islamic banks participate. But I did not understand the nature of this participation? I am interested in knowing whether the Islamic bank undertakes a project—for example, building a usurious bank—so that we can say this type is among the evidence that the Islamic bank deals in non-Islamic transactions, or does it take a fee from those banks for a work that is in itself prescribed? What is the nature of the work?

The questioner : For example, it participates in one of the projects in a joint-stock company, participating with half a million dinars.

The Shaykh : No problem, what is the type of work the bank is doing?

The questioner : An industrial project or a commercial project. The bank paid, bought five hundred thousand shares, with five hundred thousand dinars. At the end of the year, this company distributed profits, and its share by percentage—for example—was eight percent of the value of its contribution to this project. So is the eight percent that it obtained through its contribution to this project permissible?

The Shaykh : I think the answer to this has already been given, in the context of my previous words; because the company in which the Islamic bank participated does not deal in usurious transactions.

The questioner : They all dealt in usurious transactions, that is the problem.

The Shaykh : That is what we said earlier.

The questioner : That is what we are emphasizing.

The Shaykh : And therefore, this is not permissible.
...

Another questioner : ... Social Security and the Housing Bank, there are no joint-stock companies ... .

The Shaykh : How?

Another questioner : ... My Shaykh, or rather ... I do not remember exactly whether the Islamic bank, or Social Security, or the Housing Bank, participated with eleven million dinars in it, either in the Housing Bank or in Social Security.

The Shaykh : Yes.

The questioner : And this—may Allah will it—I will verify ... it.
... .

Another questioner : My Shaykh, the important thing is whether ... in Islam, joint-stock companies are not named as companies are named.

The Shaykh : No, no, there are none.

The questioner : There are no joint-stock companies in Islam ... fundamentally, they are not mentioned.

The Shaykh : Glory be to You, O Allah, and praise be to You. I testify that there is no god but You ... .