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Q & A --> Trade and Transactions --> The Ruling on Benefiting from Interest [One’s Money] through a Bank

Question : A question was asked regarding [the validity of] benefiting from interest made through the bank.

Fatwa in Brief: This is not permitted. Clearly, such interest is the result of riba, and [on these grounds,] it is illegal to deal with banks.

Shaykh Ibn al-‘Uthaymin, Majmu‘ Durus wa Fatawa al-Haram al-Makki, 3/386-390

Response:

It is permitted to accept interest gained on your money in the bank. However, this interest should not be used to benefit the individual; rather, it should be directed towards projects that generally benefit Muslims.

Commentary:

Islam declared riba illegal. The most obvious kind of riba occurs when someone takes out a loan, upon which a specified amount of interest has been agreed, so that s/he pays back this money in installments, and over a prolonged period of time.

The prohibition of this kind of riba is clearly stated in the Noble Qur’an and in the hadiths and is the established consensus of the [Sunni] Muslim Imams. Hence, 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)

Likewise, the Prophet (upon him be peace) said: “gold is to be exchanged for [the same amount of] gold, and anything extra is riba”. On the basis of this evidence [the Qur’anic verse and hadith], the prohibition upon any act of riba is firmly established. Also, if money is put into a bank [or similar institution], on the understanding that it will accrue a specific amount of interest, then this must be understood as a type of riba in Islam.

A Muslim should not benefit from, or use this interest, as it has been gained illegally. However, a Muslim may accept this interest if s/he channels it into a morally worthy cause,[1] such as the building of a mosque, a hospital, or s/he dedicates it to the service of the poor, and so as to follow the Sunna of the Messenger of God (upon him be peace). Indeed, the Sunna directs us on what we should do with illegally made profits, so that Muslims may shoulder their responsibilities wisely.[2]

And God knows best.

Dr. Anas Abu Shadi


[1] On this see Imam Ghazali, Ihya’ ‘Ulum al-Din, pp. 882-3.

[2] Shaykh Jad al-Haqq, Fatawa Dar al-Ifta’ al-Misriyya, no. 1260, 5th Muharram 1402, 2nd of November, 1981.