These
days there is a lot of confusion regarding the Islamic laws concerning
modern banking. This post shall examine whether it is allowed to receive
interest from banks or not, and also the ruling regarding credit cards and mortgages, loans etc.
First of all, we shall examine the shar'i (Islamic) definition of riba (interest).
بداية الهداية للشيخ المحدّث محمد بن الحسن الحر عاملى
Bidayatul Hidayah by Shaikh Hurr al Amili (ra)
فَصْلٌ(419)
Section 419
[فِى
الرِّبَا وَ اَقْسَامِهِ وَ شَرَايِطِهِ ]
The interest and its categories and conditions
الرِّبَا
حَرَامٌ، - وَهُوَ بَيْعُ المُتََماثِلَينِ مِنَ المَكِيلِ وَالمُوزُونِ
بِتَفَاضُلِ، اَوْ مُؤَجَّلاً، وَالقَرْضُ بِشَرْطِ النَّفْعِ
Interest
is haram. Interest refers to the trade of the same class of commodities
which are quantified by being weighed and measured, involving the
receipt of profit (i.e. for example trading 1kg of barley A in exchange
for 2 kg of barley) or deferred payment. Interest also involves issuing
debt on the condition of receiving additional profit
الفقه التجارة لسماحة السيد
الشيرازي
Fiqh al Tijarah (Rules of trade) by Ayatullah Shirazi
Section two: The laws regarding riba
مسألة: الربا قسمان:
الأول: ما
يكون في المعاملة.
الثاني:
ما يكون في القرض
Riba is of two kinds, one which occurs in trade, and the other which occurs in debt.
Translator's note: As can be seen from the above definitions, riba is only applicable for two instances:
i) On Trade
ii) On debts
Also, as seen above, in the case of trade riba is only applicable on commodities of the same class which are measured and weighed. Here are some authentic ahadith about it:
وسائل الشيعة (آل البيت) - الحر العاملي - ج ١٨ - الصفحة ١٥٥
Wasail al Shia by Shaikh Hurr al Amili, Volume 18 Page 155
وباسناده عن الحلبي عن أبي عبد الله (عليه السلام) قال: لا بأس بمعاوضة المتاع ما لم يكن كيلا ولا وزنا
And
by his isnad (chains of narration), from al Halabi from abi Abdillah
(as) who said: "No problem with charging additional quantity (in
exchange of commodities) when the commodity is not quantified by being
measured and weighed."
Grading
Shaikh Muhammad Hasan al Najafi (Jawahirul Kalam, Volume 23, Page 358): Mutawatir (Very highly authentic)
وسائل الشيعة (آل البيت) - الحر العاملي - ج ١٨ - الصفحة ١٣٣
Wasail al Shia by Shaikh Hurr al Amili, Volume 18 Page 133
محمد بن يعقوب، عن عدة من أصحابنا، عن أحمد بن محمد، عن ابن فضال عن ابن بكير، عن عبيد بن زرارة قال، سمعت أبا عبد الله (عليه السلام) يقول: لا يكون الربا إلا فيما يكال أو يوزن
Shaikh
Kulaini (ra), from a number of our companions, from Ahmad b. Muhammad,
from b. Fudal from b. Bukair, from Ubaid b. Zurarah, who said: I heard
Aba Abdillah (as) say: "Riba is not applicable except on what is
measured or weighed."
Grading
Shaikh Muhammad Hasan al Najafi (Jawahirul Kalam, Volume 23, Page 359): Mutawatir (Very highly authentic)
جواهر الكلام - الشيخ الجواهري - ج ٢٣ - الصفحة ٣٥٨
Jawahirul Kalam by Shaikh Jawahiri, Volume 23 Page 358
(لا ربا إلا في مكيل أو موزن) فهو المشهور بين الأصحاب شهرة عظيمة، بل عن الخلاف و مجمع البيان والتذكرة وظاهر الغنية والسرائر الاجماع على عدم الربا في المقدر بالعدد
"Rib
is not applicable except on what is measured or weighed", this rule is
extremely popular among the scholars. In fact, from (the books) al
Khilaf by Shaikh Tusi, Majma' al Bayan by Shaikh Tabrisi, Tadhkiratul
Fuqaha by Allama Hilli, al Ghunyah by ibn Zuhrah al Halabi and al Sarair
by Ibn Idris al Hilli, there appears to be Ijma (consensus) on the
inapplicability of riba on things which are quantified by
counting/numbers (i.e. for example currency).
Translator's note:
As can be seen from the information provided above, riba is only
applicable in trade and debts; and in the case of trade the commodities
should be of the same class and need to be quantified by measuring and
weighing.
In the case of "interest" from banks, it should be noted that bank deposits are neither considered (in shariah) trade nor debts
(as money is deposited in the bank by customers for safe keeping and
other facilities), and even if for the sake of argument it were to be
considered a trade, money/currencies are not weighed and measured (it is quantified by counting the numbers). Therefore the "interest" paid by banks to customers is NOT considered riba and is allowed.
Furthermore, in the case of non Muslim banks, there is further allowance.
وسائل الشيعة (آل البيت) - الحر العاملي - ج ١٨ - الصفحة ١٣٥
Wasail al Shia by Shaikh Hurr al Amili, Volume 18 Page 135
وبهذا الاسناد قال: قال رسول الله (صلى الله عليه وآله): ليس بيننا وبين أهل حربنا ربا نأخذ منهم ألف ألف درهم بدرهم ونأخذ منهم ولا نعطيهم.
ورواه الصدوق مرسلا نحوه
ورواه الصدوق مرسلا نحوه
And
by this isnad, he said: The Prophet (pbuh) said: "Riba is not
applicable between us and the harbi (non dhimmi kafir) people, take from
them thousand dirham for one dirham, take from them but do not give
them."
Shaikh Sadooq (ra) narrated similar to it in a mursal hadith.
Grading
Shaikh Muhammad Hasan al Najafi (Jawahirul Kalam, Volume 23, Page 382): Authentic
Ayatullah Sadiq Rohani (Fiqh al Sadiq, Volume 18 Page 160): Authentic
Ayatullah Muhammad Shirazi (Fiqh al Tijarah): Authentic
الفقه التجارة لسماحة السيد
الشيرازي
Fiqh al Tijarah by Ayatullah Shirazi
Section three
أخذ
الربا من الكافر
Taking interest from the kafir
As
for the kafir, so there is no doubt in the permissibility of taking
interest from him, due to the hadith of the Prophet (pbuh): "Riba is not applicable between us and the harbi
(non dhimmi kafir) people, take from them thousand dirham for one
dirham, take from them but do not give them.", which is very popular among the scholars, in fact there is ijma on it.
Translator's note:
As can be seen from the ahadith and fatawa above, taking interest from
non dhimmi kuffar (whether they are outside the Muslim countries or
inside them) is allowed. Therefore, receiving interest from non Muslim
banks (such as most of the western banks) is allowed. Here are also some
fatawa from contemporary maraji:
المسائل المنتخبة للسيستاني
Al Masail al Muntakhiba by Ayatullah Sistani
المعاملات المحرمة
The haram transactions
( مسألة ٦٦۲ ) : لا ربا بين الوالد والولد ولا بين الرجل وزوجته فيجوز لكل منهما أخذ الزيادة من الاخر ، وكذا لا ربا بين المسلم والكافر غير الذمي اذا أخذ المسلم الزيادة
Fatwa 662: Riba is not applicable between the father and son, husband and wife, it is permissible for both of them to take profit from the latter. Like that, riba is not applicable between Muslim and non dhimmi kafir when the Muslim takes the profit.
منتخب الأحكام للخامنئي
Muntakhibul Ahkam by Ayatullah Khamenei
المعاملات
Transaction
المكاسب المحرمة
The forbidden occupations/means of earning
مسألة 778: لا ربا بين الوالد وولده ولا بين الرجل وزوجته ولا بين المسلم والكافر
Fatwa 778: Riba is not applicable between the father and his son, the man and his wife, the Muslim and the kafir.
Translator's note:
It has been shown above that taking interest from all banks, especially
the non Muslim banks, is permissible. Now we shall examine the issue of
taking loans, mortgages and using credit cards.
Going back to the previous hadith, "Riba is not applicable between us and the harbi
(non dhimmi kafir) people, take from them thousand dirham for one
dirham, take from them but do not give them.", it is evident that the Muslims are permitted to TAKE interest from kuffar, but not to PAY them the interest.
مسالك الأفهام - الشهيد الثاني - ج ٣ - الصفحة ٣٢٨
Masalik al Afham by Shahid al Thani, Volume 3 Page 328
هذا إذا أخذ المسلم الفضل، وإلا حرم
The
non applicability of interest between Muslims and the non dhimmi kuffar
is where the Muslim receives the interest, otherwise it is haram.
جواهر الكلام - الشيخ الجواهري - ج ٢٣ - الصفحة ٣٨٢
Jawahirul Kalam by Shaikh Jawahiri, Volume 23 Page 382
وعلى كل حال فصريح المرسل المزبور أن المراد من نفي الربا بيننا وبينهم أخذه منهم، لا إعطاؤهم كما هو صريح جماعة وظاهر آخرين، بل لا أجد فيه خلافا صريحا
In
any case, the implication behind the hadith about the non applicability
of riba between the Muslim and non dhimmi kafir, is that the Muslims
take the interest from them but not pay it to them, as has been stated
by a group of scholars as well as others, in fact there is not found on
it any explicit difference.
Translator's note:
To conclude, as shown above, Muslims are not allowed to pay interest to
non dhimmi kuffar, therefore it is not correct to take loans, mortgages
etc from non Muslim banks where interest would then be due to them.
Similarly for credit cards, which may entail paying interest in case of
going over limit, therefore they should be avoided. For Muslim banks
also, it is not allowed to pay them interest. Therefore, in all cases, loans, mortgages, credit cards etc should be avoided.
Thank you for your research and post!
ReplyDeleteSalam brother,
ReplyDeleteThanks for sharing. Could you please also explain about Islamic banking and what they call sharia compliant mortgages? I want to know if they are halal or not. What are the Islamic finance alternatives.
I've heard some scholars say that if you use credit cards in a way that you don't go overdue on overdraft payments so that you don't have to pay any interest then it is fine, what do you think?
ReplyDeleteSalam brother bhooka,
ReplyDeletePlease don't forget about my query, it is a very important issue. I'm sure many other readers would also find the answer useful.
@Anonymous: Walaikummus salam,
ReplyDeleteIslamic banks often offer mortgage on the basis of musharakah (partnership) and ijara (lease) instead of on riba (interest). Ideally the way it works is that the customer as well as the bank itself jointly purchase the property (the customer pays the deposit, bank pays the rest of the price), then the bank resells its own share to the customer at the same price it was bought on and not charging any profit (although this point is irrelevant, as even if the bank demands a profit it would not be considered riba, because as shown in the post, riba is applicable in buying and selling when two things of the same type [which are measured and weighed] are involved, whereas as money and a house are obviously neither of the same type and neither are they measured and weighed), and allowing the customer to pay the price in installments over the years.
The way the Islamic bank then makes profit is by charging the customer rent for occupying the house till he has paid off the price of the bank's share. The customer also has to pay for the administrative and maintenance charges regarding the property. So all in all the customer does not have to pay riba, instead he pays rent (as well as the original deposit) which is halal. That is, the customer ends up engaging in musharakah (partnership in buying) and ijarah (lease) deal which is completely halal, while being able to avoid riba which is completely haram.
Ofcourse, as you can see, the bank is still able to make a profit and islamic mortgages are not necessarily cheaper (in fact they can often be more expensive than the packages offered by normal banks). This what often makes people then argue that "islamic mortgages are just a sham, they still charge you riba in disguise of rent", but this argument is completely baseless, because while the customer does have to pay pretty much the same amount of money (if not even more) as in a normal mortgage (it is foolish to assume that an islamic bank would just throw away money) but the conditions are clear that it is not riba.
While sometimes normal mortgages maybe cheaper, it's best to go with proper islamic ones because one is not going to get barakah in a home purchased on a riba based transaction (as well as suffering in hereafter).
@Abbas: Walaikummus salam,
ReplyDeleteAs for credit cards, yes as long as you don't end up paying interest it is halal. However, I'd mentioned in my post as a precaution (ihtiyat) that they should be avoided, because people often do at times end up missing a payment and then having to pay interest.
Also, taking any debt is makrooh (except for things like marriage, buying a house, hajj etc) so using credit card should be avoided because essentially whenever one makes a payment via credit card, he is basically "borrowing" money from the bank and later paying it back (and if he defaults then he has to pay interest). So overall it is makrooh anyway.
Wassalam
Jazakallah Khayr!
ReplyDelete