Discussion of a transaction conducted in an Islamic bank, along with a discussion of installment sales.

The questioner : The Exalted Allah says: From this perspective, the Islamic bank proceeds with its transactions. In practical life, the Islamic bank performs an operation or reality that may differ from this statement, as follows: If a person needs a sum of money for trade or to purchase something, such as a car or a house, and so on—let us suppose he wants to furnish a commercial shop—the original principle in trade is that there are several conditions for a sale: that I be the owner of the commodity itself, and that the other person be able to pay for it. The fundamental principle is that the owner, the one who is selling, must own this commodity. So the Islamic bank says to this person: "Go to such-and-such a merchant and get a quotation in the name of the Islamic bank." When the other merchant comes and asks for a quotation, naturally, when a merchant sells a car to the Islamic bank or to any other person, he must have a profit; this is necessary. In this situation, the person takes this quotation and brings it back to the Islamic bank. The Islamic bank then says, for example: "This quotation is worth one thousand dinars; we will sell it to you for one thousand and two hundred dinars, or one thousand and fifty dinars." Here, the Islamic bank has made a profit on top of the profit the merchant made?

The Shaykh : Excuse me, please, stand for a moment. Do you mean what you are saying, or did your tongue slip? Do you mean what you are saying when you say, "I will sell you this quotation for such-and-such"?

The questioner : Yes, because this is what happened; this is what happened to us. Of course, this is a practical occurrence; I am not fabricating this against them. This commodity comes, and a person wants to open a commercial shop. Of course, we give him this quotation in the name of the Islamic bank. Of course, we made a profit on this quotation. When he goes to the Islamic bank, the bank says: "We will sell you this quotation for such-and-such. Do you accept?" He says, "If he needs the money, yes, we accept." What is your opinion of this statement, or is this something prescribed by the Shari'ah, and what is its ruling in Islam?

The Shaykh : First of all, my brother, your introduction with the noble verse is, unfortunately, a practice followed by those who make lawful what Allah has forbidden in sales. They proceed from this verse . Do you see if any Muslim says that Allah has made every sale lawful? Does any Muslim say that Allah has made every sale lawful, and that there are no sales that are prohibited? What do you know? You do not know. Well, it is not the case that every sale, my brother, is forbidden, nor is every sale lawful. The sale that is permissible by the Shari'ah has its conditions. For example, you just mentioned in your speech that this merchant, or the bank you are talking about, says that when one wants to sell something, he must be present, right? And this is correct, and they cannot refute it, due to his saying (peace and blessings be upon him): Have you not heard this hadith in your time? It is a hadith in Sahih al-Bukhari and Muslim. And on this basis, the jurists said... and thus the bank resorted to concealment, claiming to hold fast to the text... "The car you want, but go to the one who owns it, because it is not permissible for the bank to sell what it does not have. But go to the agent or the merchant, and look for the car that pleases you, and bring its invoice." What I wanted to draw your attention to, and the attention of others as well, is that when you hear the noble verse , do not understand it as an absolute sale, meaning as one pleases. There are conditions, and among these conditions is what you are hinting at in your speech, and the Islamic bank is adopting it in principle, saying, "I do not have a car; go to the merchant and bring an invoice with it." I have clarified this point to you before we enter the answer: Not every sale is valid. Now, why does the buyer not buy from the company, i.e., from the source, and buy from the Islamic bank? I will answer you: The company sells at two prices: the cash price, which you call "cash" in the country, and the price of what? The deferred price, which you call today "installment sales," right or not? I am asking you a question: right or not?

The questioner : As for us, it may be the case for some people, but as for us, this is not the case.

The Shaykh : Excuse me, as for you, what do you mean?

The questioner : A merchant of foodstuffs.

The Shaykh : Be patient a little. You are selling foodstuffs, a merchant, meaning, for example, bags of rice and cocoa, and so on. You do not make two sales.

The questioner : A fixed sale for everyone, whether the person takes it or not.

The Shaykh : Never mind, stay with me. I mean, you do not sell on installment one time and in cash another time, but you sell either always in cash or always on installment. And I tell you in advance that this is not possible, and you are saying that this is a reality with us. Bring it to see; give me the answer to my question, and perhaps it has become clear to you.

The questioner : Our method of sale is, for example, if a person has money, he buys, and we take it in cash. But another person, of course, we trust him, and we can record his account in the books on the basis that it is a debt, and he pays it off after a period, but the two prices do not differ.

The Shaykh : Okay. If a man comes to you and says, "I do not have money, I want it on installment," do you sell to him at the same price that you sold to the cash customer who came to you and you sold to him minutes ago? Do you sell to him at the same price?

The questioner : According to my trust in the person.

The Shaykh : We assume the person you trust in, for example, does not say to you, "You trust him." This trust does not bring its details, because there is still the person you trust in who comes to you and says, "I want a hundred bags, for example, of rice, and I cannot pay except after a year." Do you sell at the same value that you sold to this merchant who came to you minutes ago and paid you the value?

The questioner : Our Shaykh, there is a difference in the situation, because it means my money is idle for a year.

The Shaykh : May Allah guide you. You are justifying the ruling before you issue the ruling. You issue the ruling first, then justify it.

The questioner : Generally, it is one sale for everyone.

The Shaykh : Never mind, we have heard this from the beginning. It means I... The answer is that you do not want to answer us as you please... In my speech, I intended to draw attention to a factual reality. You are saying that we have no sale except one price, and I told you in advance that this is not possible, as if I am challenging you, and I have no need to challenge you, but this is a scientific research. This cannot happen absolutely, except in a society that is an Islamic society, as they were in the early times. And I do not believe today that a person has not understood the Book of Allah, nor the hadith of the Messenger of Allah (peace and blessings be upon him), nor has he ever heard his saying (peace and blessings be upon him): Or has he never heard the hadith of Ibn Mas'ud, who said: It was said to one of the narrators of the hadith, and he was Sammak ibn Harb: "What are two sales in one sale?" He said: "That you say, 'I will sell you this for such-and-such in cash, and for such-and-such on credit.'" The speech is clear. Okay.
I return to summarizing and say: A Muslim who is cultured and knowledgeable in this Prophetic, Sunnah environment is the opposite of one who lives in a society that deals in transactions, some of which are lawful and some unlawful. This second category, the unlawful ones, includes some that involve usury (riba) and some that do not, but all of them are unlawful. It is impossible for someone living in this society, rather than that other one, not to sell two ways: selling for cash at one price and for deferred payment at another price. This is unavoidable. And I can now take the answer from the non-answer, which is: you did not answer. Your non-answer is an answer that when a person you trust repeats to you, it is better than you repeating to me. A trustworthy person comes to you and says, "I cannot, and I need to open a shop, and so on. Give me, for example, a hundred bags of rice or sugar, and so on, and the payment will be after a year." It is impossible, while living in this society I described to you, even briefly, not to say, "These are worth this much," meaning more than the merchant you sold to just minutes ago. It cannot be otherwise. And if you act contrary to what I think of you, you will be the ideal man, and I congratulate you and give you good news that you will be a fine merchant, and I hope you are. I do not care what you sold me; what matters to me is that you understand the outcome from me. I congratulate you on this transaction and tell you, "Be glad," because this man who sold a hundred bags of sugar or rice on credit for a final term of one year is as if you gave him half a bag as charity without compensation. This is how it came in the authentic Sunnah: This is in the Sunnah. And so I think about these merchants and say, "Oh, what a loss!" May Allah, Mighty and Majestic, make the ways easy for them to overcome this, just as the Messenger (peace and blessings be upon him) answered when the poor came to him and complained about their condition and poverty, saying, "O Messenger of Allah, the rich fast as we fast, pray as we pray, and give charity, but we do not give charity." He said: and so on, the well-known dhikr known to everyone. After the prayer, the messenger of the poor went to the poor, and they rejoiced and were content. But the messenger of the poor came a second time and said, "O Messenger of Allah, the rich have been told what you said to us, and they did what we did." He said: .