Investment in saving certificates
Fatwa No: 81911

  • Fatwa Date:18-6-2000 - Rabee' Al-Awwal 16, 1421
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My sister is a widow who has three minor daughters, with no means of income other than the nominal amount she received after the death of her Husband from his employer. My question is can she invest this money in some defence saving certificates,life policies or fixed certificate schemes so that she may get a handsome amount at the time of enchasement in future? Thank you.


Praise be to Allah, the Lord of the Worlds; and blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.
Whoever looks after orphans should invest their money in the fields which may bring them the most profit . But the fields where such an investment could be operated should be legal i.e. permitted by the Sharia , such as selling, purchasing or making a business in partnership etc. As for investment certificates mentioned in your question, they are forbidden by the Sharia. In fact all the transactions you mentioned are based on interest. So it is not permissible for any Muslim to deal in them.
The pre-conditions for any correct investment are 1- The field of investment should be known.2-It should be legal.3-The investor should be entitled to take only a given percentage from the profit and not from the capital. 4-The losses are the investor's not the company's.
Such conditions are not met in the investment based on these certificates. No one knows where they invest the money collected from selling these certificates. Probably they invest in forbidden areas. They do not fix the percentage from the profit but they fix it on the capital. The company bears all losses whereas the investor does not bear any part of these losses .
Therefore, Scholars have decided that reality of these certificates is nothing but interest based loans which are forbidden in Islam.
Allah knows best.

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