Question :
A question was asked regarding the validity of dealing with banks.
Fatwa in Brief: This is not permitted, because
they [banks] are built on the practice of charging
interest [riba: often translated as “usury”). It
is forbidden to put one’s money in them regardless of
interest or lack of interest accrued. In fact, doing so
only supports sin (ithm) and transgression (‘adwan).
Shaykh Ibn Baz, Majmu‘ Fatawa wa Maqalat, 19/137
Response:
1. Islam defines and prohibits two types of
riba: riba al-ziyada, and riba an-nasi’a,
and the latter stands for any form of riba that
is charged over a fixed period of time. These
prohibitions are in keeping with [meanings derived from]
the Noble Qur’an and the Sunna and the consensus (ijma‘)
of the [Sunni] Muslim Imams.
2. The interest charged by banks is a form of illegal
riba. Putting one’s money in banks without gaining
interest, however, for the purposes of protecting one’s
money is permitted.
Commentary:
Islam declares the charging of interest (riba) to
be illegal. The most important type of riba is
the taking of a loan with a previously specified
agreement on the amount of interest this money will be
charged; so that the borrower may delay paying it back
[until s/he can do so at a later time]. The fact that
this is forbidden is clearly proven by the [words of
the] Noble Qur’an, through the Sunna, and [has resulted
in] the consensus of the Muslim Imams. God said:
“Those who swallow usury cannot rise up save as he
ariseth whom the devil hath prostrated by (his) touch.
That is because they say: trade is just like usury;
whereas God hath permitted trading and forbiddeth usury.
He unto whom an admonition from his Lord cometh, and
(he) refraineth (in obedience, thereto), he shall keep
(the profits of) that which is past, and his affair
(henceforth) is with Gody. As for him who returneth (to
usury) – Such are rightful owners of the Fire. They will
abide therein”. (Q. 2: 275)
“God hath blighted usury and made almsgiving
fruitful. God loveth not the impious and guilty”.
(Q. 2: 276)
Similarly, the Prophet (upon him be peace) remarked that
“gold is to be exchanged for [the same amount of] gold,
and anything extra is riba”. From these texts and
others, it is clear that the charging of riba is
illegal.
Likewise, if an amount of money is put in a bank, in the
understanding that it gains a specified quantity of
interest, this is also a form of riba [and thus
illegal]. The [overwhelming] evidence against this
practice includes the previous texts and the consensus
of scholars. However, the practice of keeping one’s
money in banks for the purposes of safety, and not for
taking interest, is permitted. For, such money is not
set aside for the purpose of charging interest; while
the fact that a Muslim’s money mixes with money that is
gained illegally [through riba] does not render
the former also illegal. And if this is the case,
Muslims are free to invest their money in any legally
permitted way.
Ultimately, God Almighty will ask each Muslim about
his/her money. S/he will be asked regarding where s/he
earned it, and on what s/he spent it. If banks invest
their money, and pay their taxes (zakat) in the
ways in which Islam instructs them to do, there is no
problem [with them]. This is the opinion of the majority
of the modern People of Knowledge from al-Azhar
[University] and elsewhere; and this opinion is
supported by the relevant scriptural sources.[1]
Other people even believe that charging interest is
permitted, following in this the Shafi‘i scholars and
others who hold the same view.[2]Their [original] opinion was that only the paying of
interest on gold [and the like] was prohibited, and
that, even when it became the general currency, this
prohibition should not extend to money. Yet, the
Shafi‘is view has changed over time. Nowadays, they
argue that as paper money became the general form of
currency in all eras and places, it has become necessary
to categorize it as gold and silver.
And God knows best.
Dr. Anas Abu Shadi
[1]
Shaykh ‘Abd al-Majid Salim, Fatawa Dar al-Ifta’
al-Misriyya, no. 615 and 618, 27th
Sha‘ban, 1348 AH, 27th January, 1930.
[2]
Muhammad Sai‘d Tantawi (Shaykh al-Azhar), Dr.
‘Ali Jum‘a (Mufti of Egypt), and Dr. Nasr Farid
Wasal (ex-Mufti).