QA on Islamic Banking (Answers by Dr. Manzur-e-Ilahi)
Question No. 1 :
Is it permissible and likable for a Muslim to do day to day banking with a bank like IBBL OR is it the same as banking with any other interest based conventional bank?
Alhamdulillah. Wassalatu wassalamu ala rasulillah.
Islamic banks like IBBL in Bangladesh which really operate according to Islamic sharee’ah, and do not deal with riba which is haraam, and do not take what is called interest in return, and they do not engage in transactions which are not acceptable in sharee’ah, undoubtedly transaction with them is halaal and dealing with them is acceptable according to sharee’ah.
The Standing Committee for Issuing Fatwas of Saudi Arabia was asked: Is it permissible to deal with Islamic banks, even though some of them go against sharee’ah and engage in kinds of transactions that are forbidden? They replied: “It is permissible to deal with banks and financial institutions that do not deal with riba. But if they deal with riba then it is not permissible to deal with them, and they are not Islamic banks”. [Fataawa al-Lajnah al-Daa’imah, 13/310].
And it also says in Fataawa al-Lajnah (13/365): “If the Islamic bank does not deal with riba, and rather it invests money according to shar’i principles, then it is permissible for you to deposit your money with them for investment purposes”.
This is a strong recommendation from them about Islamic banks to be halal and permissible if they protect Shariah compliance.
On the other hand, dealing with conventional banks which are based on riba in their all transactions and dealings, is clearly haram in Islam according to the consensus opinion of the Muslim scholars as Allah SWT prohibited riba in the Quran. So there is no permission in islam to deal with these banks.
It is also observed that many Muslim brothers and sisters raised a question if contemporary Islamic banking is halal. All those who raised this question, are undoubtedly well-wishers of Islam, Islamic economic system and Muslim Ummah. Accordingly, while we achieved success in establishing Islamic banking on one hand, we should not be ignoring the issues and objections being raised by such Muslim brothers and sisters in order to ensure that we lay the foundations of this industry on strong, straight and acceptable basis of Islamic Shariah.
We may say to them that we are required by our deen of Islam to implement a complete Islamic way of living in our individual and collective lives and the society and the government as well. The Islamic banking and financial system is a part of such system and is not construed to be applicable in isolation while other laws and customs repugnant to the Shariah requirements are still in force. However, for the sake of our own benefits, in order to avoid interest and riba by ourselves and providing interest-free opportunities to our brothers and sisters in Islam, we should promote and support the Islamic banking and finance in the country with all our possible efforts and endeavors. We should not try to pull legs of an infant who is just trying to take his first step towards a long journey to go.
However, we should try to ensure that he commences his journey on the right way, with strong footings. Such Islamic banking, may not be termed as perfect, but can provide us with a shelter from interest based transactions for the time being, and might support us in augmenting a truly Islamic financial system, and more appropriately said, will serve as an experiment for the time when we will really be in a position to the implement the complete Islamic way of living in our beloved country.
May Allah Almighty bestow us his blessings and enable us to evolve a complete system of life in accordance with the principles of life provided by the Noble Quran and the Prophet (SAAWS). May Allah accept our efforts and forgive us for our mistakes in this field in our individual capacities, as well as, as a society.
Question No. 2 :
If one has a Mudaraba Saving Account with a bank like IBBL – is it halal and permissible for him/her to take the profit calculated at the end of year for his amount with the bank OR is it RIBA and Haram for him/her?
Alhamdulillah, wassalatu wassalamu ala rasulillah.
If Islamic banks have effective Shariah supervisory boards/councils and they operate all transactions Islamically in real sense then it is permissible to take the profit of MSA calculated at the end of the year as halal income and it will not be considered as haram riba insha Allah. Islami Bank Bangladesh Ltd has a strong Shariah Supervisory Council and it tries its best to protect Shariah compliance in its dealings. It has also Shariah audit system to identify any Shariah violations and once any violation is detected, the profit will be separated as doubtful income to be spent in welfare.
Shaikh Salih Munajjid in his website islamqa.com (Fatwa No. 85408) wrote :
“….The ruling on the savings prizes in the bank may be known once we know the nature of the operations of the bank itself. In the case of riba-based banks, it is not permissible to save money in them, or to take the savings prizes that they offer. That which is based on falsehood is itself falsehood. The savings account in a riba-based bank is in fact a loan with interest, and the bank is guaranteeing the money of its customer and paying riba-based interest to the money owner according to its agreement with him.
In the case of Islamic banks, there is nothing wrong with taking the savings prizes that they offer, so long as these banks are Islamic in reality and not only in name. The Islamic bank does not guarantee the saver’s money, rather it is exposed to profit or loss, and it does not give a fixed amount if it is profitable, rather it gives a certain share according to the agreement between them….”.