What is the ruling on investing in stocks in banks and companies?
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The questioner : The questioner says: I heard your statement regarding stocks, specifically stocks in companies and banks. So, please clarify the ruling on this matter on this night and in this good gathering?
The Shaykh : Yes. As for investing in banks, it is forbidden without exception, because the foundation of banks is based on riba (usury or interest). In reality, they are ribawi (usurious) gains established on this basis. Therefore, investing in them is forbidden without exception.
As for other companies that derive their profit from sources other than riba, the original ruling is permissibility. The original ruling is that participation in them is permissible. However, if we are certain that they deal in riba, such that they deposit their surplus funds in banks and take interest on them, then at that time we say: the precaution is that a person should not invest in them. If he has already invested, let him remain with his investment. Then, when the profits that are distributed every year come to him, if he knows the amount of the riba, for example, if it is twenty percent, he should extract it to rid himself of it, not as an act of worship or to draw near to Allah through it, because it will not be accepted from him. If he intends to draw near to Allah with it, it will not be accepted from him. But he should spend it in charity, or in building a mosque, or in general public interests, to rid himself of it. And if he does not know the proportion of the riba in this profit, he should rid himself of half of it, half of the profit, and the remaining half will be lawful, because this is closer to justice, where he does not wrong others and is not wronged himself. Yes.
The Shaykh : Yes. As for investing in banks, it is forbidden without exception, because the foundation of banks is based on riba (usury or interest). In reality, they are ribawi (usurious) gains established on this basis. Therefore, investing in them is forbidden without exception.
As for other companies that derive their profit from sources other than riba, the original ruling is permissibility. The original ruling is that participation in them is permissible. However, if we are certain that they deal in riba, such that they deposit their surplus funds in banks and take interest on them, then at that time we say: the precaution is that a person should not invest in them. If he has already invested, let him remain with his investment. Then, when the profits that are distributed every year come to him, if he knows the amount of the riba, for example, if it is twenty percent, he should extract it to rid himself of it, not as an act of worship or to draw near to Allah through it, because it will not be accepted from him. If he intends to draw near to Allah with it, it will not be accepted from him. But he should spend it in charity, or in building a mosque, or in general public interests, to rid himself of it. And if he does not know the proportion of the riba in this profit, he should rid himself of half of it, half of the profit, and the remaining half will be lawful, because this is closer to justice, where he does not wrong others and is not wronged himself. Yes.