Explaining the difference between an Islamic bank and a non-Islamic bank.

The Shaykh : We were discussing what the difference is between an Islamic bank and a non-Islamic bank.

The questioner : If an Islamic bank opens a credit line for you and you do not pay the amount, they will not charge you interest without a cost-plus sale. You are committed to paying it back when the goods arrive. The interest-based bank will calculate charges against you if you do not pay the full amount from the date the goods are shipped until the documents are received.

The Shaykh : How... I did not understand it.

The questioner : The interest-based bank opens a credit line for you, for example, for one thousand dinars, do you understand, my Shaykh?

The Shaykh : Excuse me, I do not understand this banking language. It opens a credit line for you, never mind, let me...

The questioner : According to the agreement concluded between you and the bank.

The Shaykh : Let me speak in my own language. I want to buy goods worth one thousand dinars from France. We go to the Islamic bank and say, "I want such-and-such goods; please order them for me from France." What does the Islamic bank do with me?

The questioner : If you are a known man to the Islamic bank and you have a transaction with them, they will open the goods for you without you paying them the amount, on the condition that you pay. So this type goes and contacts France, saying, "Such-and-such merchant wants to buy goods worth one thousand dinars; please ship the goods, and upon shipping, they will receive the amount from him... interest or profits. But the interest-based bank is different.

The Shaykh : Never mind, let us stay here. The goods arrived. Did the Islamic bank pay the price of the goods to the French company, or does the French company trust the Islamic bank? Just as the Islamic bank trusted its customer and did not take a loan from him, so the French company does not take a loan from the bank. Rather, as soon as the merchant customer receives the goods and pays the price, the bank in turn pays this price to the company. Is that right?

The questioner : There are two types.

The Shaykh : Let me explain this type now.

The questioner : The one you call two types. As for the company, if it trusts the merchant and sends the documents at its own expense, this bank has no involvement. If the merchant pays the money, it transfers it to the company. But if the company does not trust...

The Shaykh : How is it not involved, my brother? We are talking about the merchant requesting through the bank.

The questioner : Through the bank, so the bank pays, then.

The Shaykh : Because, may Allah reward you, I started, for example, I want goods worth one thousand dinars through the Islamic bank.

The questioner : The bank pays upon shipping. When the shipping documents are delivered, the bank pays immediately without delay.

The Shaykh : Be patient a little. The bank pays in advance, and it has not received from the merchant.

The questioner : It has not received yet.

The Shaykh : It has not received.

The questioner : It might be if the merchant is not trustworthy.

The Shaykh : My brother, we are talking about the first scenario, may Allah reward you. It trusts this merchant.

The questioner : It trusts him, so it does not pay.

The Shaykh : It does not pay. The goods arrive, and the merchant receives them and pays the price to the bank. Yes, this type of transaction exists.

The questioner : This is called a benevolent loan by the Islamic bank.

The Shaykh : But this might be with you, but it is not available in the countries.

The questioner : It is available in Kuwait, the Islamic Development Bank.

The Shaykh : We will seeAbu Layla : what it has.
Abu Layla : The second type, which is the bank.

The Shaykh : Let us stick to the first type. May Allah guide you, what do you want to say specifically? This is not your talk. We are discussing one scenario, and this is a second scenario.
Abu Layla : Regarding the bank and opening the credit line, as I understand it, it has no relation to the trade. The bank has absolutely no relation to buying or selling goods. It only secures the amount through the commission agent. For example, what does it say to the French company? "Such-and-such merchant has secured the amount with me, and it is currently with me in your name. But you want the goods. I will send you this money during this period, my Shaykh."

The Shaykh : This is not what we asked. What we asked first was, what does the bank do with this money?
Abu Layla : He was talking about the bank buying.

The questioner : It is an intermediary. Either you pay the amount to it, and then what does it do with the amount? Of course, the bank benefits...
Abu Layla : My Shaykh, do you have a specific question if you remember it?

The Shaykh : We are discussing this transaction. There is no problem with it, and Islamic banks can be established on this type, but this is not what we know in our countries.

The questioner : There are two types of Islamic bank. There is a cost-plus sale, so it opens it... on a cost-plus sale or a regular sale.
Al-Halabi : My Shaykh, as you mentioned, this is not conceivable because a bank with thousands and millions would give a benevolent loan.

The Shaykh : No, but he is saying it exists.
Al-Halabi : My Shaykh, in the narrowest scope, perhaps it is not meant to be...

The questioner : I open with the Development Bank in Kuwait for hundreds of thousands.
Al-Halabi : And with a benevolent loan?

The questioner: Yes.
Abu Layla : But the commission, my Shaykh.

The Shaykh : Here is the problem. If it were called a benevolent loan.
Al-Halabi : The commission, what is the commission? How much is it?

The Shaykh : One, one. A benevolent loan, Professor, means, as I understood before, that this is not available in the countries. But you objected to your word "benevolent loan" by saying it takes a commission. So where is the benevolent loan?

The questioner : It takes fees for messengers and employees.

The Shaykh : I am telling you, why does it take it? I am saying why is it called a benevolent loan.

The questioner : Because it says, "I paid the amount from the date of shipping to the date of arrival."

The Shaykh : In exchange for a commission. May Allah guide you.

The questioner : The commission has no involvement.

The Shaykh : If the bank did not take a commission, it would not pay.

The questioner : Allow me to explain to you more.

The Shaykh: Go ahead.

The questioner : The interest-based bank takes a commission and takes interest.

The Shaykh : Leave the interest-based bank alone. We want to see what the reality of the Islamic bank is in the Shari'ah.

The questioner : Its reality is that it takes a commission for opening the credit line.

The Shaykh : My brother, we understood that, but we are asking how this is called a benevolent loan.

The questioner : ... Because if it acted like the interest-based bank and took interest or profits, it would not take it from you.

The Shaykh : My brother, what is the meaning of a benevolent loan, may Allah reward you?

The questioner : That it does not take interest from you. It does not take profits from you.

The Shaykh : No, it is taking profits.

The questioner : It takes fees for messengers. These are fees for opening.

The Shaykh : My brother, if I and you, a big merchant, came to you and said, "Give me one hundred thousand as a loan for the sake of Allah. I do not want to buy trade goods, just give me one thousand dinars... this is a benevolent loan.

The questioner : Of course.

The Shaykh : It says, "I want a fee for registration and employees, and so on. Not in exchange for the benevolent loan, but a fee for employees, is that not so?

The questioner: Yes.

The Shaykh : Okay, another person comes and wants one million. What does it take from him?

The questioner : It does not take anything. They have a benevolent loan for nothing. I understand you, my Shaykh.

The Shaykh : How for nothing, when they took a thousand from me?

The questioner : No, there are benevolent loans without buying trade goods. That is, they have a benevolent loan.

The Shaykh : ... My dear, I am saying without trade!

The questioner : Yes, without trade.

The Shaykh : You are going back to saying there is no trade. My question is, I want... one thousand dinars, and they gave me one thousand dinars. What will they ask me for after five months, one thousand dinars or more?

The questioner : One thousand dinars, a benevolent loan for Allah.

The Shaykh : And the employees.

The questioner : They have no work.

The Shaykh : And those have work.

The questioner : No, here the one thousand dinars is not my place, but there, money was spent on messengers, and the one who corresponded with them paid fees for messengers, telegrams, and cables.

Another questioner : Goods worth one hundred thousand and goods worth one thousand, they take two...

Another questioner : No, it does not increase.

Another questioner : Now these are employees, and the merchant is the same. Goods worth one thousand dinars... and the same telegrams, the same paper, the same writing, and everything is the same. But instead of putting four zeros, he puts...

Another questioner : If the amount increases, the commission increases.

The Shaykh : Okay, how do you call this a cost-plus sale?

The questioner : This is not a cost-plus sale.

The Shaykh : What is this?

The questioner : A regular credit line in exchange for.

The Shaykh : No cost-plus sale, no credit line. It is permissible in the Shari'ah.

The questioner : ... There is a Shari'ah committee.

The Shaykh : Okay, do you see that the increase increased in exchange for nothing? In exchange for zero? They put the increase. Is this permissible in Islam?

The questioner : They are scholars who permitted this.

The Shaykh : Professor, it is not permissible. In my opinion today, an Islamic bank means a name without a substance. There is no solution except to tighten our belts.

The questioner : But.

The Shaykh : But.

The questioner : We trade with people, my Shaykh.

The Shaykh : Trade within the limits of the Shari'ah, but do not commit what Allah has forbidden.
Al-Halabi : I know merchants who stopped their dealings with these banks, which forced the banks themselves to create something Sharia-compliant. But everyone says, "I cannot..."
Abu Layla : You can go yourself and buy directly.

The questioner : It is a great risk to put your money in, pay it, and have it go through a bank. It might be lost, and there are people who send them garbage. Of course, the bank does not intervene in the internal affairs of the goods; rather, the bank tries to take official things, such as shipping bills and documents certified by the Chamber of Commerce, which is a kind of guarantee. But if you pay your money there and they do not ship it to you, what do you do? What guarantee do you have that your money will be returned? The next day, they close their office and leave.

The Shaykh : We do not deny that banks, regardless of their names, facilitate transactions for merchants. But this is a reality we do not deny, and we hope that Muslim merchants and those whom you called scholars will admit that this facilitation comes at the cost of prohibition. It is not that just because something is facilitated, it becomes permissible for us. I have a hadith in Sahih al-Bukhari from Rafi' ibn Khadij (may Allah be pleased with him) who says: Do you see how this is the position of the Muslim? We do not deny that banks make the difficult easy and bring the distant near, but one must avoid falling into riba in this, because the Messenger of Allah (peace and blessings be upon him) said: And without offense, if you do not consider yourself among the scholars, and perhaps you do not consider yourself among the regular students of knowledge, but you have, first, a general Islamic culture, and second, you have a mind that thinks, then when we put you before the reality, you did not find an answer other than that the scholars say so. Fine, we refer it to the scholars: "Bring your proof if you are truthful." Why did we not refer it to them in this way?

The questioner : By Allah, the scholars are supposed to find a better solution for people...

The Shaykh : No, the answer is wrong.

The questioner : What is the answer, sir?

The Shaykh : I am thinking how to teach you the answer, as... And by asking a question: Does the Muslim world have no problem except this one?

The questioner: No.

The Shaykh : There are many problems. So, what is the solution to these problems?

The questioner : Ruling by Islam.

The Shaykh : May Allah reward you. You have understood, so adhere to it. If the solution is not a partial one, the solution is a radical one. Therefore, if that is the case, until it becomes easy for Muslims and they take the means to establish Islamic rule, they should not continue to contradict Islamic rule while seeking Islamic rule, because this has become a contradiction and a conflict. What will Allah say, as you know? So, as a nation, either we are serious about establishing Islamic rule, or we are joking and not serious. If it is the former, it will not be in disobedience to our Lord, because He conditions us with: Meaning, if you rule by the Shari'ah, our Lord will support us against our enemies. We are currently contradicting the Shari'ah in dozens, indeed hundreds of matters. For example, our women are clothed yet naked. There is an Islamic party that I know does not care about this aspect; they say it will disappear when the Muslim state is established. What do you think? Do you see how I told him, "You do not consider yourself a scholar or a student of knowledge; you have a general culture and understand the man, but I do not know why, after asking the scholars, we reached this point and stopped? What is your argument?" I fear that after this, trade has become the factor.

The questioner : But my Shaykh, what is the solution now in our current situation if we do not find an Islamic ruling? Do we stop trade?

The Shaykh : I said, "May Allah reward you, tighten your belt."

The questioner : ... Instead of importing through the bank, I take from the one who ate it... I profit ten cents.

Another questioner : It exists, meaning there are others who deal in it.

Another questioner : Let others go to the Fire.

The Shaykh : .
Abu Layla : Believe me, my Shaykh, the one who takes the correct path, even in these days, will find his provision expanded.
Al-Halabi : .

The questioner : As for contractors, the contractor must put down a deposit of twenty-six thousand dinars, either in cash or, as the brother preferred, he puts a guarantee... You put it in the bank, which has riba. He was asked, "What is the alternative?" He said, "I have no alternative. I am telling you it is halal or haram..."
Al-Halabi : And our Lord will make things easy. Did you see once, my Shaykh... One of our brothers came... He works in cars, as a mechanic, and so on. His beard, by Allah's will, was like this. He asked:The Shaykh : The question that day was from his manager, who told him, "Shave your beard and I will take it." What is your opinion? He said: A month later, he received a contract in Saudi Arabia for five thousand riyals, five times his salary. So look, our Lord (Glorified and Exalted is He) provides for a person based on his intention to keep himself away from the haram.
Abu Layla : The owner of the shoe who entered the assembly praying with the shoe on used to take three hundred dinars every month. When the manager saw him and asked about the beard... The man hastened to grow his beard, so his beard became thick. He told him, "Either work or the beard." Perhaps he asked him. In any case, he said, "The beard," and left to work for one hundred dinars. I asked him a few days ago, "How are you?" He told me, "By Allah, I am enjoying one hundred dinars better... There was no blessing in the first ones."

The Shaykh : That is it.