Q56 :There is no doubt about the fact that usury is
forbidden. However, Qur’anic reference to usury speaks of doubling and
multiplying the capital as a result of usurious transactions. The
Hadith suggests that such transactions lead to feelings of greed,
selfishness, laziness, etc. on the part of the lender and misery on
the part of the borrower. Nowadays, banks lend at a fixed rate of, say,
10-12 percent and give a slightly lower rate to depositors. If it is
ascertained that the bank does not use certain deposits for lending to
others with interest, is it permissible to use such deposit accounts
and receive the fixed interest given on such deposits.
A56 : It is true that the Qur’an refers to usury
as doubling up the money lent to someone in need, or even multiplying
it. However, this does not mean that usury must reach a rate of 100
percent or more before it is forbidden. If you refer to the verses
dealing with usury in the second surah of the Qur’an, “The Cow”, you
will see that the injunction is very clear: “Believers, fear Allah and
waive what remains outstanding of usury, if you are truly believers.
If you do not, then take notice that you are at war with Allah and His
messenger. If you repent, you may have only your principal loans,
neither inflicting nor suffering injustice.” (2:278,279) The Qur’anic
verse is clear in requiring a lender to get back only what he has
advanced. [It takes into account all usury, regardless of the extent;
whether nominal or exorbitant.] The Prophet has disapproved of selling
two measures of low quality dates for one measure of high quality
dates, because he considered that as usury. He told his netpanions to
do each transaction separately for cash, so that there is no element of
usury in the deal. In the light of the foregoing, all scholars agree
that even the smallest amount of usury or increase on the principal
amount advanced to anybody, is forbidden. When you deposit money with
a bank, you are certainly not in a position of a lender and the bank is
not a borrower. You have defined the relationship in a way which means
that any returns given to you by the bank are legitimate earnings. As
you realize, banks use the money they receive from their clients to
lend it to borrowers, charging them interest, which means that they
actually receive more than they give, in return for the loans they
advance. Such transactions are forbidden in Islam. However, if you
arrange with the bank that it invests your money for you in some way
which does not involve lending to others with interests, then the
return from such an investment may be legitimate to take. Some banks
invest in shares and unit trusts. If the share they invest in are those
of netpanies which do not trade in something forbidden, then such an
investment is lawful. Quite recently, the Mufti of Egypt published a
ruling stating that such an investment is lawful, even if the rate of
returns is fixed at the outset. He makes it clear, however, that
straightforward bank transactions of borrowing and lending, which
involve interest are unlawful. If you wish to make use of the services
provided by banks, you should bear in mind that any interest given on
deposits used for lending is unlawful to have. If you give instructions
in the bank to invest your money in a lawful way, as in a profit-loss
sharing account, then the money you receive on your investments is
perfectly legitimate.
Our Dialogue ( Source : Arab News – Jeddah )