How to utilize the interest received on Salary from the Bank?
Interest Money
As-salamu-alaikum,
I have been on this website for more than a month now and it’s really wonderful.
People from different part of the world are connected to this website and try to give some better advice using their experience and knowledge given to them by Allah swt.
I was just thinking whether or not it’s allowed in Islam to give the interest money from Bank for Salary A/c to be given to a Muslim people not as a zakat or sadaka but just to help them.
I have been giving my accounts interest to non-Muslims residing in my area, but I see here lots of Muslims who really need help and charity.
So is it allowed to give them the money as the interest from the bank to be given to a Muslim, if not then where it should be utilized and how it should be spent.
I do have lots of Maulana's/sheiks in my area to whom I can ask but I want to publish this as I know many Muslims have the same doubt.
May Allah swt give the best of his knowledge to all of us.
~ Ayaaz Ahmed
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As Salamualaikum,
Brother Ayaaz, Jazakallah for asking this question. This issue is true with most of us or better to say, with all of us.
Before answering your question, I will insha Allah cite a Hadith and some Aayaat from the Quran, which show how dangerous and how ugly or unclean riba or interest money is.
Al-Tirmidhi Hadith 2826:
Narrated by Abu Hurayrah Allah's Messenger (saws) said, "Usury has seventy parts, the least important being that a man should marry his mother."
And some Aayaat from Surah al Baqarah (275-279):
2:275
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah
has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
2:276
Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever.
2:277
Indeed, those who believe and do righteous deeds and establish prayer and give zakah will have their reward with their Lord, and there will be no fear concerning them, nor will they grieve.
2:278
O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.
2:279
And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.
I felt the necessity to mention this, because I am aware that many Muslims take this issue very lightly.
Now for your question. The Ulama have ruled that riba is Haraam for YOU to use. Thus, apart from using it for yourself or your dependants / family, insha Allah, you can give it to anyone in need. Because it is Haraam for you and not for them. (Fatwa by Shaykh Ibn ‘Uthaymeen (Rahimahullah) in Fataawa Ibn ‘Uthaymeen, 21/105)
The Ulama have also given other alternatives to spend this money or infact to get rid of it, but I will keep my answer limited to your question, insha Allah.
And bear in mind that it is neither Sadaqah, nor Zakah, it is just the money which does not belong to you at all. Infact, you would be differentiating your Halaal earning from the riba, by separating it and giving it away.
Alhamdulillah, my Rabb Has kept my life free from Riba, I pray the same for my fellow Muslim brothers and sisters.
May Allah keep our lives free from riba
Aameen
Wassalamualaikum wa Rahmatullah
Muhammad Waseem
IslamicAnswers.com Editor
And May Allah Forgive us if we have dealt with riba, unknowningly, and accept our Tawbah for dealing with riba, knowingly.
Aameen
Muhammad Waseem
IslamicAnswers.com Editor
ASAK,
I've been pondering over this issue for quite some time. I still find relating interest on the grounds of interest for quite some time. Here is my opinion :
Let me first define the two terms which have been construed has interest in the modern world:
Riba: It means addition, Increase
Usury: Usury is the opposite extreme of charity, unselfishness, striving and giving our selves in the service of Allah and of our fellow men.
Usury is condemned and prohibited in the strongest possible terms. There can be no question about the prohibition. When we come to the definition of usury there is room for difference of opinion. 'Umar, according to Ibn Kathir, felt some difficulty in matter, as the Prophet left this world before the details of the questions were settled. This was one of the three questions on which he wished he had had ore light from Prophet.the other two being Khilafah and kalalah. Our 'Ulema', ancient and modern, have worked out a great body of literature on usury, based mainly on economic conditions as they existed at the rise of Islam.
An apt simile: where as legitimate trade or industry increases the prosperity and stability of men and nations, a dependence on usury would merely encourage a race of idlers and worthless fellows who do not follow their own good.
Owing to the fact that interest occupies a central position in modern economic life, specially since interest is the very life blood of existing financial institutions, a number of Muslims (including myself) have been inclined to interpret it in a manner which is radically different from the understanding of Muslim Scholars throughout the last 14 centuries and is also sharply in conflict with the categorical statements of the Prophet(peace be on him) .
According to Islamic teachings any excess on the capital is Riba (Interest). Islam accepts no distinction, insofar prohibition is concerned, between reasonable and exorbitant rates of interest, thus what came to be regarded as the difference between usury and interest; nor between returns on bonus for consumption and those for production purposes and so on.
Surah Al-Imran, Ayat 130
O ye who believe! devour not Usury, doubled and multiplied (irregular); ......
If we study the above verse, I realise that usury out here is more referred to unconditional extortion. Clearly, the reference here points toward exorbitant interest rates.
Though, there has been a boom of Islamic Banking, however, I find their strategy quite abstruse. It is more Psychological than literal.
Plus, Islamic Banking all over the world has failed on quite a few fronts: A few examples:
Some Islamic banks charge for the time value of money, the common economic definition of interest (riba). These institutions are criticized in some quarters of the Muslim community for their lack of strict adherence to Sharia.
The majority of Islamic banking clients are found in the Gulf states and in developed countries. With 60% of Muslims living in poverty[citation needed], Islamic banking is of little benefit to the general population. The majority of financial institutions that offer Islamic banking services are majority owned by Non-Muslims
One Malaysian Bank offering Islamic based investment funds was found to have the majority of these funds invested in the gaming industry; the managers administering these funds were non Muslim.
Hence, the controversy that surrounds the so called, Islamic Banking, continues. The question of whether or not available Islamic banking really is Islamic is still a matter of debate among the Muslim academia.
There is not an iota of doubt that Usury is prohibited not only in Islam but in Christianity and Judaism as well.
However, there is a system in place and there is no incongruity. the way I see it, ( Yes I could be wrong ), that banks are companies which when they make profit end up giving bonus in the form of interest (regulated). I know a lot of people may not conform to my theory, but I want you ponder over before bashing me.
In fact, I will be more than happy to capitulate if we could have an healthy discussion over this.
Wa alaikum as Salam brother,
The words you mention that Banks receive profits in form of interest are answered by Allah in Surah al Baqarah, Aayah 275:
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah
has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Interest exists all over the World and it is difficult to keep oneself free from it, but not impossible. Allah says in the Quran, in Surah Ankbut, Aayah 69:
As for those who strive hard in Us (Our Cause), We will surely guide them to Our Paths (i.e. Allah's Religion - Islamic Monotheism). And verily, Allah is with the Muhsinun (good doers)
This is very much true, as I have experienced, Alhamdulillah. The existence of interest in financial institutions of modern world can not be an excuse for consuming interest.
And brother, we do not have the power to face Allah in a war, bu least I don't (referring to Surah Baqarah, Aayah 279). So, we should abstain from interest, to the extent possible.
I believe the Quran itself does not conform to your theory, based on the Aayah quoted above.
In the final Khutbah, Rasoolullah Sallallahu Alaihi Wasallam said (what means):
....Remember that you will indeed meet your LORD, and that HE will indeed reckon your deeds. ALLAH has forbidden you to take usury (interest), therefore all interest obligation shall henceforth be waived. Your capital, however, is yours to keep. You will neither inflict nor suffer any inequity. Allah has Judged that there shall be no interest and that all the interest due to Abbas ibn ‘Abd’al Muttalib (Prophet’s uncle) shall henceforth be waived…
Read the following about what you mentioned that Umar Radiyallahu Anhu doubted (ibn Kathir):
The subject of Riba is a difficult subject for many scholars. We should mention that the Leader of the Faithful, `Umar bin Al-Khattab, said, "I wished that the Messenger of Allah had made three matters clearer for us, so that we could refer to his decision: the grandfather (regarding inheriting from his grandchildren), the Kalalah (those who leave neither descendants nor ascendants as heirs) and some types of Riba.'
`Umar was refering to the types of transactions where it is not clear whether they involve Riba or not. The Shari`ah supports the rule that for any matter that is unlawful, then the means to it are also unlafwful, because whatever results in the unlawful is unlawful, in the same way that whenever an
obligation will not be complete except with something, then that something is itself an obligation. The Two Sahihs recorded that An-Nu`man bin Bashir said that he heard the Messenger of Allah say,
(Both lawful and unlawful things are evident, but in between them there are matters that are not clear. So
whoever saves himself from these unclear matters, he saves his religion and his honor. And whoever indulges in these unclear matters, he will have fallen into the prohibitions, just like a shepherd who grazes (his animals) near a private pasture, at any moment he is liable to enter it.)
The Sunan records that Al-Hasan bin `Ali said that he heard the Messenger of Allah say,
(Leave that which makes you doubt for that which does not make you doubt.)
Ahmad recorded that Sa`id bin Al-Musayyib said that `Umar said, "The Ayah about Riba was one of the last Ayat to be revealed, and the Messenger of Allah died before he explained it to us. So leave that which makes you doubt for that which does not make you doubt.'
Ibn Majah recorded that Abu Hurayrah said that the Messenger of Allah said,
(Riba is seventy types, the least of which is equal to one having sexual intercourse with his mother.)
Continuing on the subject of prohibiting the means that lead to the unlawful, there is a Hadith that Ahmad recorded in which `A'ishah said, "When the Ayat in Surat Al-Baqarah about Riba were revealed, the Messenger of Allah went out to the Masjid and recited them and also prohibited trading in alcohol.' The Six collections recorded this Hadith, with the exception of At-Tirmidhi. The Two Sahihs recorded that the Messenger of Allah said,
(May Allah curse the Jews! Allah forbade them to eat animal fat, but they melted it and sold it, eating its price.)
`Ali and Ibn Mas`ud narrated that the Messenger of Allah said,
(May Allah curse whoever consumes Riba, whoever pays Riba, the two who are witnesses to it, and the scribe who records it.)
And this makes it clear that the people who witness interest, whether they term it interest or they term it profit, or they term it returns, fall under this Hadith, thus a Bank does fall under this, if it is not on the Shar'i rulings. There is no douba that banks deal in interest, so, the statement de Umar Radiyallahu Anhu is not applicable here. Indeed, just like the hadith quoted above, lawful is clear, and unlawful is clear.
Wallahu A'lam.
Muhammad Waseem
IslamicAnswers.com Editor
What is your opinion about the benefits reaped from investment made in the Share market? Would you call it gambling or trade?
There are different types of
shares dealt in the share
market.
There are preference shares and equity shares, and among them, there are futures, and others among there.
As far as preference shares are concerned, I believe they are not allowed to be invested. This is because it has a preference, thus not
amounting to "trade", and it has a fixed coupon termed as
preference dividend.
Equity shares are allowed for a Muslim to invest, as they do
not give preference, and do not have a fixed return. The return is based on the EAT (Earnings After Tax) and after deducting the preference share dividend.
And these shares also give an
ownership to their holders,
such that they have voting
rights in the matters of the
company.
Having said this, if the company is a Bank or one
which has most of its income
from interest, then one should not invest in them.
Alhamdulillah, a Muslim is not short of Halaal and clear
(without a doubt) options. We just need to trust in Allah and look for them. Apart from these, if there are options in stocks or shares that are within the Shar'i limits,
insha Allah, I would have no
problem investing in them.
Also to mention, the Ulama
have said that dealing in
futures is not allowed, as it
involves a lot of speculation,
and moreover, the rates for the futures are to some extent derived from the fluctuations in the interest rates over time.
This is from my learning and experience.
And Allah Knows Best.
May Allah enable us to eat
what is Halaal and keep us
away from what is Haraam Aameen
Wassalamualaikum
Muhammad Waseem
IslamicAnswers.com Editor
Can a Muslim ever get to own a house? Since mortgage is not allowed in Islam.
I am really confused because what about the Muslims (religious leaders and moderate Muslims) that do own houses, are they committing haram? Isn't renting for an apartment, which increases every year, a waste of money. What if you have a big family, should family members be crammed in the small apartment. Also, there are some people who believe that students should not take loans for studies, they can stop and take a break to earn money to pay off tuition, and then go back to get a degree. Is this all considered extreme?
Salaams,
I have seen differences of opinion on this as well. Some scholars hold the traditional view of forgoeing a conventional mortgage; while others say if you need to take a loan to obtain a necessity of life (food/shelter etc) then it's permissible.
I have to share a personal experience in my process of trying to purchase a home. I went to an "Islamic" institution that advertised at our local masjids that they finance home loans the Islamic way; ie: riba-free. I contacted one of their representatives thinking that they would be open to helping a fellow Muslim out and had flexible standards. I have a decent paying job that I've been with for 6 years, no bankruptcies, and never have been evicted. I have poor credit because I have not financed a lot of things and because I had some old medical bills on my credit report. I thought all in all, I was a good risk if they were going to treat me as a human and not a credit score like the "dunya" banks do.
What ended up happening was this: because they were "riba-free" (although they admitted there were several misc fees they charged that differed from fees that national banks charge, this is how they make their money I suppose) and not taking interest on the loan, they had even HIGHER standards of creditworthiness. I was not even considered an option unless I could put up 30-50% of the value of the loan, which is basically paying a third to half of the price of the house. Needless to say, if I had that kind of savings I wouldn need a to come to them, I would've just gotten a mortgage the standard way (I had not been able to do this because of my credit standing). I felt this whole experience was dissappointing, and it didn't really feel like they were real Muslims trying to help other real Muslims avoid dealing with dunya...it felt more like they were saying "we are better than dunya in principle so you must be the best of the best for us to work with you". A real slap in the face, if you ask me.
-Amy
IslamicAnswers.com Editor