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Fatwa CenterNon-interest banking transactions
Question
Dear Brother: I have an import company.In our country, Islamic banks have very poor service; it is very difficult for us to get the proper credit to run the business. I have a current account without interest in one of the banks that deals with interest. The bank offers us the following (Islamic financing service): When we want to import some commodities from foreign company, the bank will open the L/C and finance the operation. When the commodity is shipped, the bank is a consignee and our company is a notify party. The bank will add an agreed upon fix profit margin, of course this margin depends on the period of time during which we have to pay back the money. If for any reason, we do not pay on time, the bank will not add extra money on the top of the payment. Is this is Halal taking into consideration the rigidity of the Islamic banks and the flexibility of the commercial banks in our country.
Answer
Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.
It is not permissible for a Muslim to deal with forbidden transactions in banks that deal with usury and interest, claiming that Islamic banks are not satisfactory in dealings.
Allah, The Most High, did not permit Haram (forbidden) things except in case of necessity. As Allah says: "He has explained to you in detail what is forbidden to you, except under compulsion of necessity? And surely many do lead (mankind) astray by their own desires through lack of knowledge. Certainly your Lord knows best the transgressors.” (Al-An'am 6:119)
The necessity is a condition that the pubescent person reaches and as a result consumes Haram or accepts it because if he does not do so, he will die or be closer to death. There is no such necessity in your claim.
As regards the financing that the bank dealing with interest and usury is providing, its ruling differs, according to the reality of the situation. Indeed it is the content that defines the situation not the names or titles.
If the bank takes real profit, by buying goods that its customer wants to buy, and when the goods get in its possession, it sells them again to its customer by installments even with a greater price, and then this is permissible.
But if this transaction is not real; i.e. the bank does not buy the goods and the goods are not in its guarantee, and what takes place is just lending money with interest and usury to its customer, then this is a loan with Riba and it is Haram even though it could becalled otherwise.
Allah knows best.
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