The need to open an interest-based bank account in a non-Muslim country
Fatwa No: 290329

Question

Assalaamu alaykum dear brother/sister. I face the following dilemma: I live in a non-Muslim country. I am starting my own company and am in need of a business bank-account for money transactions. However, banks pay out interest money on these accounts. I want to stay away from this. They do however have the option to automatically donate the money to charity (which seems to be no problem [not haram] from what I understand). Would it be haram for me to take such a bank account and donate the money to charity? Also, I am starting this company with a non-believer. He agrees with me on this matter and finds it ok to donate the interest. However, he wouldn't mind taking the interest himself. Could you please give me advice on this matter? Would it be a sin to let him have the interest? Thanks in advance.

Answer

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

With regard to the ruling of opening an account that involves riba (interest), then, as long as there are no banks free from riba, it is permissible, due to a dire need, to open an account in a riba-based bank. The fatwa of the Permanent Committee reads:

It is not permissible to deposit money in banks that deal with riba, even if one does not take the interests, as this is helping in sin and transgression. Allaah says (what means): {…but do not cooperate in sin and aggression.} [Quran 5:2] However, if a Muslim fears to lose his money, and he does not find another alternative to save it except by depositing it in an interest-based bank, then he is permitted, in such a case, without taking any interest from depositing this money, as a way of committing the lesser of two evils, and avoiding the worst of the two evils.

Shaykh Ibn ‘Uthaymeen  may  Allaah  have  mercy  upon  him said, “If you are in need to open an account in a riba-based bank, then it is permissible, but if you are not in need of it, then do not open an account there.” [Excerpted from the Open Door meeting]

Nonetheless, you should endeavor to open a checking account that does not involve interests, as it is forbidden to take the interests, if there are any, and it is an obligation to get rid of them. You should know to which authority the bank donates these interests as the bank might donate it to a body that is Islamically forbidden to donate to, like churches, for example, or the like. Hence, it is more appropriate to take the interests and donate them yourself. Shaykh Ibn Jibreen  may  Allaah  have  mercy  upon  him was asked, “How can we get rid of the bank interests? Shall we leave it to the bank? Or should we, rather, take it and give it in charity as it is not known as to where the bank would spend it?” He  may  Allaah  have  mercy  upon  him answered: “I choose to take it and spend it in charity on the poor Muslims, and one is not sinful by doing this, Allaah willing, if he does not consume it himself, and it is not considered riba to the poor.” He also said: “It is permissible to take this interest which the bank gives to the customer as a profit provided one does not mix it with his money; rather, he spends it in righteous causes, such as on the poor, the needy, the mujaahideen, and the like; this is better than leaving it for whoever will spend it on churches and on the preachers who preach disbelief and repel people from Islam.” 

As for being a partner with a non-Muslim, in principle, this is not forbidden; Kashshaaf Al-Qinaa’ reads:

It is disliked to make a partnership with a magian, an idol worshipper, and the like, who worships other than Allaah Almighty. If it is the Muslim who runs the affairs, then Imaam Ahmad said about the Magian: 'I do not like mixing with him or dealing with him because he makes lawful what the Muslim does not make lawful. It is also disliked to make a partnership with someone from the people of the Book, even if he is not a Dhimmi [a non-Muslim living safely in a Muslim land], because he deals in riba, unless it is the Muslim who runs the affairs, then in this case, it is not disliked because one is safe from riba.' Al-Khallaal narrated from ‘Ataa’: 'The Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) forbade making partnership with a Jew or a Christian unless buying and selling is in the hands of the Muslim.'

The Kuwaiti Fiqh Encyclopedia reads:

The difference in religion does not prevent from making a partnership between a Muslim and a non-Muslim. The Maaliki and Hanbali Schools of jurisprudence condition that the non-Muslim should not be the only one who runs the affairs of the company [partnership] because he deals with riba and does not avoid what a Muslim avoids in his dealings. The Hanbali scholars said, 'What the non-Muslim buys or sells of wine from the money of the company or from the money of the mudhaarabah (for definition, please refer to fataawa 297211 and 297211) is void, and he must guarantee it [money].' The Maaliki School said, 'The partnership between a Dhimmi and a Muslim is valid provided the Muslim is present at the dealings of the non-Muslim [i.e. his partner]. But if the Muslim is absent at the time of buying and selling, then the partnership is not permissible (in principle), but if it took place, then it is valid. After that, if a Muslim doubts about the dealing of the Dhimmi with riba, it is desirable for the Muslim to donate the profit only in charity, as Allaah says (what means): {…you may have your principal money.} [Quran 2:279] In case the Muslim doubts that his partner deals with wine, then it is desirable for him to donate the profit as well as the capital money because a Muslim is obliged to pour all the wine. If he is sure (that the Dhimmi dealt with riba), then he is obliged to donate it (the profit) in charity.'..... The Hanbali School stated that it is disliked to make a partnership with a Magian Dhimmi in principle, but it is permissible with the above conditions. However, the Shaafi'i School held that dislikeablility is generalized to all types of partnership with a non-Muslim.

As regards your partner taking the interests from the company's account: it is better for you to prevent him from taking it, and you should place the condition that he is to donate it. If he, however, insists on taking the interests for himself, then this does not mean that it is forbidden to make a partnership with him as these interests are not what was intended by the company; rather, they result from opening a bank account.

Allaah Knows best.

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