Interest (riba) is forbidden in Islam. Scholars have given fatwas that interest money paid by banks should be withdrawn and given to some charitable purpose. One should not use it for one’s own expenses, and it is not considered in the payment of one’s Zakah. Thus, one is allowed to give charity out of bank interest but will not be rewarded for it as an act of charity. Rather, one will be rewarded in sha Allah for an act of repentance and for cleansing one’s money from haram sources.
The Shariah position is that earned interest is not earned, but it is still owned by the payer. But since the payer is a bank whose business is to give loans on interest, we must not return it to the payer, as such an action increases the evil of interest and empowers the evil doers. Thus, we need to dispose of this interest money by giving it to some Muslim charitable purposes to keep our own money clean.
Since interest money is considered haram, we are not supposed to use it either on ourself or on those who are considered our dependents. On the other hand, we are also not supposed to leave the interest thus accumulated to the bank either, for to do so is akin to fattening an institution that thrives on interest.
Therefore, the only permissible option left to consider for us is to take out the amount thus accumulated and give it all away to public charities such as hospitals, orphanages, refugees, and welfare. By doing so we have discharged our obligation and are absolved of any sin or guilt, in sha Allah.
The Board of the Fiqh Academy in its ninth session held at the headquarters of the Muslim World League in Makkah in Rajab 1406 AH, discussed the spread of banks dealing in Riba and the lack of alternative banks — an issue that has been referred to the board by the Secretary General. The board listened to the opinions of the members concerning this important issue that involves committing a sin prohibited by the Quran, the Sunnah and the consensus of jurists or ijma’a, and came to the conclusion that it is one of the seven grave sins.
The Glorious Quran threatens those who deal in Riba with a war from Allah and His Prophet (peace and blessings be upon him):
“O Ye who believe! Observe your duty to Allah and give up what remaineth (due to you) from usury if ye are (in truth) believes. And if ye do not, then be warned of war (against you) from Allah and His messenger. And if ye repent, then ye have your principal (without interest). Wrong not and ye shall not be wronged.”
(Al Baqarah: 278-279).
The Prophet (PBUH) says: “The acceptor of interest, its payer, the one who records it, and the two witnesses are cursed, and he said: they are all equal.”
(Reported by Muslim).
Ibn Abbas reports that the Prophet (PBUH) said: “Whenever Riba and adultery appear in a country then its people have brought the punishment of Allah unto themselves.”
threat to economy
Recent economic researches have proved that Riba is a threat on the world’s economy, policies, morals and safety, and that it is the cause of a lot of crisis from which the world has suffered. There is no way of solving such a problem except eradicating this malignant disease which is Riba — a thing that Islam has done fourteen centuries ago.
One of Allah’s Graces is that Muslims have started to regain confidence in themselves and awareness of their identity as a result of becoming well aware of the principles of their religion. Consequently, the ideas that represented the phase of psychological defeat before the Western civilisation and its capitalist system, which have found supporters who tried to misinterpret clear texts in order to make what Allah and His Prophet have prohibited seem permissible to people, have all retreated. We have witnessed a lot of conferences and symposiums held in Muslim countries and outside the Muslim world in which it has been unanimously stated that usurious interest is haram and has been proved that there are other alternative banks that conform to the Shariah.
Then came the practical step which is establishing Islamic banks that do not deal in Riba or in any prohibited transaction. These Islamic banks started on a small scale but their number in both Muslim and non-Muslim states has now achieved big growth. This certainly refuted the allegations of secularists and the victims of the cultural invasion that the implementation of the Sahriah in the economic field is impossible because there is no economy without banks and there are no banks without interests. Some Muslim states such as Pakistan, by the help of Allah, have turned their national banks into Islamic banks that do not deal in Riba in any way, and they have also demanded foreign banks to modify their system according to the Islamic economic system of the state or else they will have to close down. This is a good practice that Allah will reward them for.
Therefore, the board has reached the following decisions:
Firstly: All Muslims have to abstain from dealing in Riba or facilitating the receiving or giving of Riba in any way in order to avert Allah’s Punishment and the war from Allah and His Prophet.
Secondly: The board approves and is quite satisfied with the Islamic banks which are the Islamically approved alternative to interest-dealing banks. Islamic banks are banks in which the charter of incorporation states the bank’s commitment to the implementation of the Islamic Shariah in all its transactions and commits its administration to having a binding lawful supervision. The board calls on all Muslims allover the world to support these banks and not to listen to the evil rumors that try to distort their image. The board sees the necessity of expanding the establishment of these banks all over the Muslim world and wherever Muslims are so that these banks would be a strong network that would pave the way for a comprehensive Islamic system.
Thirdly: It is haram for any Muslim to deal with interest-dealing banks as long as he can deal with an Islamic bank. A Muslim should replace what is bad with what is good, and to be satisfied with what is halal and abstain from all that is haram.
Fourthly: The board calls on officials in Muslim countries and on managers of interest-dealing banks in these countries to seriously take up the initiative of purifying these banks of Riba in response to Allah’s Call: “And give up what remaineth (due to you) from usury if ye are (in truth) believers.” (Al Baqarah: 278)
Fifthly: Money that has been gained through usurious interest is Haram. A Muslim should not spend it on himself or on anyone he provides for; it should be spent on public interest such as building hospitals, schools etc. In such a case, it will not be considered alms but it would rather be deemed a means of purifying one’s money from a prohibited thing.
Moreover, it is impermissible to leave such interest to banks because they will get stronger with this money in their possession; they usually use such money in funding anti-Islamic institutions. In this way, Muslims’ money becomes a weapon against Muslims and a means of impairing their faith. It is also impermissible to continue dealing with these banks whether in return for interest or not.
Ernst and Young (E&Y), in their latest World Islamic Banking Competitiveness report, shows the assets of Islamic banks grew at an average rate of 17 percent per year between 2008 and 2012.
This is two to three times faster than the rate at which conventional banks grew over the same period, due in part to the global financial crisis.
Islamic banks differ because they have to run their operations in a way that is consistent with the principles of Islamic law or Shariah. This prohibits banks from dealing with businesses that are considered sinful or haraam such as pork, alcohol and gambling. Admittedly, this is not much of a constraint.
E&Y identify 25 “rapid growth market” countries which they predict will account for half of global GDP by 2020. Of these, 10 have a high Muslim population. Iran accounts for nearly half of the banking assets in Islamic banks worldwide.
Three-quarters of the rest is in the QISMUT nations (Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey) where growth has averaged 6.5 percent per year for the last five years.
Courtesy: onislam.net, bbc.com
