What is your opinion regarding the Islamic bank?

The questioner : Regarding the topic raised before the lunch meal about banks, specifically the Islamic bank, the brother who raised the question, may Allah forgive him, did not organize his question on paper so that the honorable professor would be gracious enough to encompass it and answer it. Therefore, the answer to it was neglected. I spoke with my professorThe Shaykh : a little while ago about the topic of the Islamic bank, which has become a source of reproach for us as Muslims, because it bears the name of Islam. We are reproached by non-committed Muslims, by the Christians, and by the leaders of disbelief in the country, because this bank has now started offering its shares for subscription and sale in the Amman financial market. This is one thing. On the other hand, this bank has also started absorbing 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, many mathematicians, sociologists, and others. They have permitted it, but this bank, which is now taking shape in its plans and objectives for every observer, has led us to doubt this matter. We are pressing with the question, and I hope the honorable professor will bear with me personally and bear 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 to justify my comfort with this idea or with the offerings of this bank, given that it represents Islam and bears the word "Islamic." It is now establishing several branches throughout the Arab and Islamic world. If the professor allows me,The Shaykh : I will raise a topic on which I stand on a sound position: the Islamic bank is now practicing a new operation, which is participating in government projects that exist throughout the Arab and Islamic world. It participates with deposited funds, whether these funds are deposited for its capital account or for the accounts of the depositors who participate in these projects. The projects are established in the Arab world, and I say the Arab world and not the Islamic world, because it is not governed by Islam, and you know that. These funds that enter into the projects enter 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 does the Islamic bank contribute and participate in these projects with funds called Islamic funds, or the funds of Muslims, like our case? This is all I can say after I have learned with full certainty that the Islamic bank participated in projects in this country with amounts exceeding a large number of millions. I hope to receive the answer. If the professor is pleased to postpone it to another date so that the question and knowledge about the Islamic bank, its objectives, and its system increase, that is not prevented. And if he is gracious to us now, it would please us all.The Shaykh : By Allah, the truth is that the research regarding the Islamic bank is long-tailed and has many branches. Therefore, I wished that the question would be limited so that the answer would be limited as well. The dealings of the Islamic bank are of many types and many kinds. Every dealing has its ruling in the Shari'ah. You have now presented an example, and this example may be, and I say may be, one of the proofs that the Islamic bank does not deal in a purely Islamic manner one hundred percent. And I say that this example is truly a proof of that. A question arises from me: you pointed out, indeed you stated, that there are funds in which non-Islamic banks participate. But I did not understand what the nature of this participation is. I am eager to know whether the Islamic bank, for example, undertakes a project to build a usurious bank, for instance, so that we can say this type is among the proofs 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 Shaykh : The truth is that the research regarding the Islamic bank is long and has many branches. Therefore, I wished that the question would be limited so that the answer would be limited as well. The dealings of the Islamic bank are of many types and kinds, and each dealing has its ruling in the Shari'ah. You have now presented an example, and this example may be, and I say it may be, one of the proofs that the Islamic bank does not deal in purely Islamic transactions one hundred percent. And I say that this example is actually proof of that. A question arises from me: you pointed out, or rather you stated explicitly, that there are funds in which non-Islamic banks participate. But I did not understand what the nature of this participation is. I am concerned to know whether the Islamic bank, for example, undertakes a project to build an interest-based bank, so that we could say this type is among the proofs that the Islamic bank deals in non-Islamic transactions, or whether it takes a fee from those banks for a work that is in itself prescribed? What is the nature of the work?

The questioner : No problem. What is the nature of the work the bank is doing?

The Shaykh : ... or a commercial project. The bank paid and bought five hundred thousand shares for five hundred thousand dinars. At the end of the year, this company distributed its profits, and its share, by percentage, was for example 8% of the value of its participation in this project. Is the 8% that it obtained through its participation in this project permissible?

The questioner : I think the answer to this has preceded in the folds of my previous words. Because the company in which the Islamic bank participated, or in which it participated, does it not deal in usurious transactions?

The Shaykh : They all deal in usurious transactions, and that is the problem?

The questioner : That is what we said just now. Therefore, this is not permissible.

The Shaykh : Is there a joint-stock company in Islam in the form of this company?

The questioner : It is absolutely impossible. It is absolutely impossible?

The Shaykh : According to the rule, originally, it is not permissible to establish a bank in this form. What about joint-stock companies in Islam?

The questioner : I remember, my Shaykh, that the Islamic bank participated in the Housing Bank. It participated with eleven million dinars in it, and this, if Allah wills, I will verify later.

The Shaykh: Yes.

The questioner : I recall, my Shaykh, that the Islamic bank participated in the Housing Bank with eleven million dinars in it, and I will verify this later, if Allah wills.

The questioner : There are no joint-stock companies in Islam. So the rule, fundamentally, is not present.

The Shaykh : No, there are none.

The questioner : There are no joint-stock companies in Islam, so the basic premise is not present.

The Shaykh: Yes.