בנקאות בלי ריבית בעולם המוסלמי

I have a certificate that was in an Islamic bank, then it was transferred to a regular bank. Is the interest that was added to this certificate haraam? Can I take the original amount of money and leave the interest that was added by both banks?.

Praise be to Allaah.

Firstly: 

There is nothing wrong with taking the profits that the Islamic bank gives to its customers who invest their money in Islamically acceptable mudaarabah or in permissible shares. 

With regard to the interest paid by the riba-based bank, it is haraam riba and it is not permissible to take it. It is not permissible to deposit money in a riba-based bank except in the case of necessity, in order to protect the money when there is no Islamic bank. In that case it should be limited to depositing the money in a current account with no interest, so as to do the lesser of two evils. 

We have previously explained the prohibition on dealing in investment certificates of groups A, B and C, and we quoted a statement by the Islamic Fiqh Council concerning this matter, in the answer to question number 98152. 

In order for investment or mudaarabah to be valid, the following conditions must be met: 

1.     The bank must invest the money in permissible ways, such as establishing beneficial projects, building housing and so on. It is not permissible to invest the money in building riba-based banks, cinemas or giving loans with interest to the needy. Based on that, it is essential to know the nature of the investments made by the bank.

2.     There should be no guarantee on the capital. The bank should not stipulate that it is obliged to return the capital if the bank incurs a loss. If the bank stipulates that it will guarantee the capital, then this is in fact a loan contract, and any interest that is paid on it is pure riba.

3.     The profit should be specified and agreed upon from the outset, but it should be specified as a percentage of the profit and not from the capital. So one of them may get, for example, one third or half or 20% of the profits and the rest goes to the other party. The contract is not valid if the profit is not known and is not specified. The fuqaha’ have stated that mudaarabah becomes invalid if the percentage of profit is not known. 

It says in Mataalib Ooli al-Nuha (3/517): If he says: Take this as mudaarabah and you will have a portion of the profit or a share of the profit or something of the profit, this is not valid because it is unknown, and mudaarabah is not valid unless it is for a known amount. End quote. 

Thirdly: 

What you have to do is withdraw the money from the riba-based bank, and repent to Allaah. Whatever interest you have received, it is not permissible for you to make use of it; rather you should get rid of it by spending it on the poor and needy or in the public interest. 

May Allaah increase us and you in understanding and knowledge. 

And Allaah knows best.

What is the ruling on short-term mudaarabah (buying and selling) in mixed and haraam companies in the stock market?.

Praise be to Allaah.

Firstly: 

It is not permissible to buy shares in companies that deal in haraam things, such as riba etc, whether the haraam is small or great, because a share is part of the company’s wealth, and its dealing in haraam means that everyone who invests in it is a partner in that haraam. 

Secondly: 

It is not permissible to trade in mixed and haraam shares, by buying, selling or investing, whether that is short term or long term, because it is not permissible to sell haraam things, whether in small or large amounts. A contract that involves that is a contract which it is not permitted to enter into.

 Dr. Muhammad ibn Su’ood al-‘Usaymi (may Allaah preserve him) said: Some people differentiate between mudaarabah (buying and selling) and long-term investment and say that the one who engages in mudaarabah does not have to worry if he buys a share in a company that gives or takes riba-based loans. My response is to ask these people: What shar’i justification do you have for the profit that you make on the shares when they go up? He will never have any answer but to say: I am a partner in that company. 

Similarly I say to him: what if the company were to make a loss a few minutes after you bought shares? Can you deny your connection to the company so that you will not have to bear any loss? Of course he will not be able to do that, and he will bear the same losses as all other regular shareholders. Not only that, if the company were to merge with another company or it were to be sold to another company, or it went bankrupt or was no longer on the stock market or its licence was taken away, all of that would have an effect on the mudaarib (one who buys and sells within a short period of time) and investor alike. So there is no difference between the mudaarib and the investor. End quote. 

He was also asked about the ruling on mudaarabah (buying and selling) in mixed shares? 

He replied: 

It is not permissible according to the majority of scholars, except in the case of “pure” shares, whether it is mudaarabah or investment. End quote. 

And Allaah knows best.