A Form of Riba
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I am a merchant, so I sell my goods to institutions, companies, or associations, and then I receive the money after several months, five or six months, and sometimes this period extends until my money remains frozen with these companies. The bank—sometimes Islamic banks here—pays this money immediately, but at a value less than the interest; for example, for one hundred dinars, the bank gives me ninety-five dinars to be paid immediately, and the bank collects it from this merchant in the future. So, I benefited from this by taking my money immediately instead of it staying with them for six months. Is this permissible?The Shaykh: And the bank benefited from the increase?The questioner: Yes.
The Shaykh: This contains two prohibitions: The first prohibition is riba (usury or interest); because the bank gave you ninety-five for one hundred, and this is explicit riba.And there is also riba al-fadl and riba al-nasi'ah, meaning: It is riba al-fadl (usury of excess in a like-for-like exchange) and riba al-nasi'ah (usury of deferment); because the bank will delay receiving this compensation.
The second danger: It is also selling what you do not possess and what is not in your possession; because you sold what is in the debt to this bank. You sold it now to this company; what is in its debt? Dinar, for example. You sold the dinars to the bank before you received them and before they became your property. So, there are two prohibitions. If this matter has already passed, it is obligatory to repent to Allah (Mighty and Majestic) and not to return to such a transaction. If it has not happened, it is obligatory for you not to enter into such a thing.
The Shaykh: This contains two prohibitions: The first prohibition is riba (usury or interest); because the bank gave you ninety-five for one hundred, and this is explicit riba.And there is also riba al-fadl and riba al-nasi'ah, meaning: It is riba al-fadl (usury of excess in a like-for-like exchange) and riba al-nasi'ah (usury of deferment); because the bank will delay receiving this compensation.
The second danger: It is also selling what you do not possess and what is not in your possession; because you sold what is in the debt to this bank. You sold it now to this company; what is in its debt? Dinar, for example. You sold the dinars to the bank before you received them and before they became your property. So, there are two prohibitions. If this matter has already passed, it is obligatory to repent to Allah (Mighty and Majestic) and not to return to such a transaction. If it has not happened, it is obligatory for you not to enter into such a thing.