Ruling on letter of credit
Fatwa No: 97244

  • Fatwa Date:24-6-2007 - Jumaadaa Al-Aakhir 9, 1428
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aslamu alikum warahmatullah wa barakatuho, 1- is letter of credit or documentry credit permissible in islam?. what are the muslim seller responsiblities in letter of credit?.


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.


The letter of credit which the banks issue is permissible in principle, because it is either a warranty or an authorization and both are Islamicly permissible provided there is nothing which invalidates them; this is what the Islamic Fiqh Committee declared.

However, we did not understand what you meant by the seller responsibilities in a letter of credit. Nonetheless, it is known that the letter of credit is a contract between the customer and the authority which issued it, therefore, if this letter involves paying a charge or administrative fees, then it is the customer who is obliged to pay them and not the seller. 

Allaah Knows best.

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