Ruling on a bank taking a percentage of the money in exchange for a guarantee
Machine translationRead the Arabic original
Question:
I work as the manager of a company that exports carpets from America. When an agreement is reached with a merchant, he asks me to give him a grace period to pay the amount, so I give him ninety days, but with a bank guarantee. In that case, the bank takes a percentage from him in exchange for the guarantee. What is the ruling on that?
Answer:
As for the grace period, you are to be commended for granting him time to pay what is due to him so that it becomes easier for him to settle it. As for the issue of the bank guarantee, there is still some difficulty with it. The original ruling is that it is prohibited; that is the original ruling regarding the bank guarantee. This is because it takes this increase in exchange for the money it may pay out on behalf of the guarantor. This may fall under a loan that brings about riba (usury or interest), meaning an increase, because it pays out money on his behalf with an increase. If it is possible to have a non-riba guarantee—meaning a guarantee without an increase—done out of goodwill and voluntarily, not with an increase, then there is no difficulty with it.
As for the bank guarantee with the increase that people know of today, it has been presented to the Committee of Senior Scholars, and the discussion of it has been postponed to a future session. There is still some difficulty with it, because not every guarantor pays out money. He may take it in exchange for his guarantee and his readiness to pay and deliver, or he may offer money, or he may not offer money, and the guarantor fulfills his obligation and does not need the bank.
In conclusion: There is a need for caution regarding it, and the original ruling is that it is prohibited. This is the original ruling, to the best of my knowledge; the original ruling is that it is prohibited. This is because the guarantor only asks for the increase for the sake of the money he will pay out in the future so that he can take the increase. He guarantees a thousand and takes a known amount from that thousand, such as ten, or twenty, or more, or less, in exchange for what he guaranteed. So in reality, it is taking an increase in exchange for what he pays out. It is as if he said: I will pay out a thousand for you for a thousand and ten. Thus, it falls into riba (usury or interest). It should be avoided as much as possible.
Question: ...؟
Answer: Riba (usury or interest) is [prohibited] for the guarantor, whether from the value or otherwise.
Question: Is the sin on the seller or on the buyer?
Answer: It is on both of them, because they participated in it.
I work as the manager of a company that exports carpets from America. When an agreement is reached with a merchant, he asks me to give him a grace period to pay the amount, so I give him ninety days, but with a bank guarantee. In that case, the bank takes a percentage from him in exchange for the guarantee. What is the ruling on that?
Answer:
As for the grace period, you are to be commended for granting him time to pay what is due to him so that it becomes easier for him to settle it. As for the issue of the bank guarantee, there is still some difficulty with it. The original ruling is that it is prohibited; that is the original ruling regarding the bank guarantee. This is because it takes this increase in exchange for the money it may pay out on behalf of the guarantor. This may fall under a loan that brings about riba (usury or interest), meaning an increase, because it pays out money on his behalf with an increase. If it is possible to have a non-riba guarantee—meaning a guarantee without an increase—done out of goodwill and voluntarily, not with an increase, then there is no difficulty with it.
As for the bank guarantee with the increase that people know of today, it has been presented to the Committee of Senior Scholars, and the discussion of it has been postponed to a future session. There is still some difficulty with it, because not every guarantor pays out money. He may take it in exchange for his guarantee and his readiness to pay and deliver, or he may offer money, or he may not offer money, and the guarantor fulfills his obligation and does not need the bank.
In conclusion: There is a need for caution regarding it, and the original ruling is that it is prohibited. This is the original ruling, to the best of my knowledge; the original ruling is that it is prohibited. This is because the guarantor only asks for the increase for the sake of the money he will pay out in the future so that he can take the increase. He guarantees a thousand and takes a known amount from that thousand, such as ten, or twenty, or more, or less, in exchange for what he guaranteed. So in reality, it is taking an increase in exchange for what he pays out. It is as if he said: I will pay out a thousand for you for a thousand and ten. Thus, it falls into riba (usury or interest). It should be avoided as much as possible.
Question: ...؟
Answer: Riba (usury or interest) is [prohibited] for the guarantor, whether from the value or otherwise.
Question: Is the sin on the seller or on the buyer?
Answer: It is on both of them, because they participated in it.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.