Interest Based Banks And Loans: Shaykh Bin Baz

بسم الله الرحمن الرحيم

Q: What is the legislative ruling on the following?

  • He who deposits his money in a bank and withdraws it after a year along with the interest accumulated.
  • Seeking an interest based loan from a bank.
  • Depositing ones money in such a bank without receiving interest.
  • An employee of the bank whether he be the manager or holds some other position.
  • Owning property and leasing it to the bank.

A: It is not permissible to deposit one’s money into interest based banks nor (to participate in) interest based loans due to all of this clearly being usury. In addition, it is not permissible to deposit your money in other than a bank if it has with it usury. That is also the case with loans given to anyone with an interest rate as this is prohibited with all the people of knowledge. As Allah says:

و أحلَّ الله البيع وحرم الربا

“…Allah has permitted trade and forbidden usury…” [Al-Baqarah: 275]

And He says:

يمحق الله الربا و يُربي الصدقات

Allah will destroy usury and grant an increase for charity…” [Al-Baqarah: 276]

يا أيُّها الذين آمنوا اتَّقوا الله و ذروا ما بقي من الربا إنْ كنتم مؤمنين * فإن لمْ تفعلوا فأذنوا بحربٍ من الله و رسوله و إن تبتم فلكم رءُوس أموالكم لا تظلمون و لا تُظْلَمون

O you who believe! Fear Allah and leave off whatever remains from usury, if you really are believers. And if you do not, then take notice of war from Allah and His Messenger. But if you repent, you will have your capital sum. Do not deal unjustly and you will not be dealt with unjustly.” [Al-Baqarah: 278-279]

و إنْ كان ذُو عسرةٍ فنظرةٌ إلى ميسرةٍ

“…and if the debtor has difficulty (in repaying the debt), then grant him time til it is easy for him to repay…” [Al-Baqarah: 280]  

Allah gives notice to His servants about the unlawfulness of demanding that which is owed from one who is unable to repay the debt, nor to burden him with an increase on the amount due because of granting him time in order to be able to pay the debt. On the contrary the granting of time for such is obligatory. This is from Allah’s mercy, kindness towards His servants, and protecting them from oppression and greed that will inevitably harm them and will be of no benefit to them.

As for deposits in non interest banks there is no problem in doing such if the Muslim is obliged to do so. As for working at an interest based bank this is not permissible whether he be manager, secretary, an accountant, etc. This is due to Allah’s statement:

و تعاونوا على البرِّ و التقوى و لا تعاونوا على الإثم و العدوان و اتَّقوا الله إنَّ الله شديد العقاب

And aid each other in righteousness and piety and do not aid one another in sin and transgression and fear Allah, indeed He is severe in punishment.” [Al-Ma’idah: 2]  

And due to that which is authentically attributed to the Prophet -sallahu alayhi wa salaam- where he said, “Surely Allah curses usury and he who mandates it, its witnesses, and its scribe(he who writes or types a contract that has therein usury). He said they are all the same.”  The verses and narrations that forbid aiding in the committing of sin are plentiful. Also forbidden is leasing property to banks due to the previously mentioned evidence, as this is aiding them in accomplishing their interest based activities.

Lastly, we ask Allah to bestow guidance upon all of us, to grant the Muslims with success in waging war against usury, warning against it and being sufficed with that which Allah and His messenger have declared to be lawful from business transactions.  

Translated by Najeeb Al Anjelesi

Source: فقه و فتاوى البيوع

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