Interest Issues
Bank deposits / Loans / Accounting

PPT by Moulana S M Rizvi       |     Selected Ques & Answers from Aytullah Sistani website

 

A. Interest on Bank Deposit  (DRAFT ONLY Pl contribute to finalise)

I. Classification of Banks (for the purpose of banking sharia rules)

A. MUSLIM Bank (in any country incl. kafir country) (m)
1a. 100% private (mp)
1b.100% government (need not be Islamic system)? (mg)
1c. Mixed (even if v small %of either pvt or govt) (mm)

B. KAFIR Bank(including kafir govt) (k)
1a. In muslim country (majority citizens are muslims) (km)?
1b. In Kafir country (kk)

Definition of Kafir bank( Urf?)
no

In case of a mixture of Muslim & Kafir Bank rules of muslim bank will apply

Issue of Keeping deposit & taking interest

i Ayatollah Khoie ruling The initial niyat should be that interest will not be demanded if not given,for all types of banks.(However one can even sign any document with any clause.)
*For mp bank
It is ok to receive & keep full interest.
*For mg,mm&km banks(Majhool ul Malik?)

Permission has to be taken from Marja/Vakil AND 50% of interest amount received is to be given as sadqa
.(will be determined by live mujtahid.After passing away of agha khoi 50 % is'nt appplicable)

General permission can be taken or may be required every time
if mujtahid wants he can give general permission valed till his death

*For kk bank
It is ok to receive & keep full interest.

All these rulings including 50% is applicable even after passing away of Ayat Khoie
. no
Other marjas ruling if less than 50 % cannot be used by mukallid of ayat khoie?

ii Ayatullah Seestanis ruling
The niyat definition is different.The niyat should strictly be for safekeeping or other than to receive interest
.(in book of agha sistani the  masala of condition is this ;while depositing the amount one should not put the condition of intrest)

Same ruling then applies for the different types of banks as that of ayat Khoie

Except that in case of km bank it is 100% ok to take the interest amt
????

Principal amount remains unaffected & can be withdrawn despite being deposited in mg,mm,km banks& getting mixed with other money.

B. Loan from Bank

Govt. bank: Loan agar bank se li jaey to zaroori hai ke majhool-ul-malik ki niyyat se liya jaey. Mujtahid agha seestani ne is ki permission di hai. Aur jab wapis daine ho to extra daine me koi haraj nahi. Dar asal aap loan wapis nahi de rahe. Kaikin agar govt. me loan ki niyyat ki to haraam hoga.

 

Non muslim Bank: Us mai bhi loan ki niyyat se lena haraam hai. Laikin wo non muslim jis ka maal mohtaram nahi hai is se loan ko laina jaiz hai laikin loan ki niyyat se nahi balke ‘Istinqaz’ ki niyyat se yani iska maal laine ki niyyat se kyunke is ka maal mohtaram nahi hai is liye laina jaez hai but not as a loan. Agha seestani ke lihaaz se chahe pvt. ya non muslim govt. ka bank ho.

 

Agha Khoei ke lihaaz se non muslim ka ye masala hai. Laikin govt. non muslim = govt. bank.

 

Pvt. bank: (i.e. Muslim Pvt. bank)  Koi tareeqa nahi loan with interest ka - haraam hai

Laikin agar koi loan ki niyyat le with interest to haraam hai laikin wo maal jo as a loan liye hain wo halaal hain.

 

Lekin agar Pvt bank mein kuch hissa Govt( non muslims ?)  ke koi idare ka ho to use hum govt bank maan sakte hai  
Muslim Govt - definition ?
  Click here for Bank classification issue

C. Accounting For Interest

It has not been possible to resolve this matter re Permissibility of ' Accounting for interest ' ( Paid or recd) by a Accountant.
There is a person who makes voucher & passes the accounting entry in the computer & there is a person who authorizes or supervises this transaction Please help in completing this chart .This has serious implications for all momin accountants

Permissibility of Accounting for Interest by a Momin Accountant :-

Co./Employer

 

 

Shia (knowing fiqh)
Muslim
Non Muslim
Interest Paid to Lending Bank

 

Muslim Non Muslim Unknown
ok ok ok
     
     
interest Received from Deposit Bank

 

Muslim Non Muslim Unknown
ok ok ok
     
     

Notes
In case of Govt. Bank in Muslim country - treat as Muslim bank
In case of Govt. Bank in Non Muslim country - treat as Non Muslim bank irrespective of Muslim sharholding
In case Shareholding even > 1 % of Muslim treat as Muslim ?


Some Selected Q&A on this topic From Ayatullah Sistani website

Question : Sir, during his job, an accountant has to deal with different types of interest transactions. However, an accountant has nothing to do with that interest (neither he takes interest nor he gives it), rather his duty is merely to record these transactions and keep a record of that. Moreover, he personally thinks that this is a bad act (giving and taking interest) and that it should not be practiced but he has to do so as this is an integral part of his job. What is your kind opinion in this regard? Is it allowed or not?

A: (016) If he [i.e. the accountant] is able to refrain from recording these transactions then there is no objection, otherwise it is not allowed.
 

Given below is a Q& A from site   http://www.sistani.org/html/eng/menu/4/?lang=eng&view=d&code=62&page=1 can u pl clarify since hardly any one will be able to work as an accountant as most companies' accounts involve recording of interest.

Question : Sir, during his job, an accountant has to deal with different types of interest transactions. However, an accountant has nothing to do with that interest (neither he takes interest nor he gives it), rather his duty is merely to record these transactions and keep a record of that. Moreover, he personally thinks that this is a bad act (giving and taking interest) and that it should not be practiced but he has to do so as this is an integral part of his job. What is your kind opinion in this regard? Is it allowed or not?

Answer : Given the supposition made in your question, the job is not permissible because it involves keeping, recording and dealing with interest based transactions.

 

http://sistani.org/index.php?p=616687&id=1132  BANKING questions

Question :

If a Muslim tries to get from the bank’s cash dispensing machine some of his own money and more money than what he had asked for is dispensed, is he allowed to take the extra money without the bank knowing about it?

Answer :

It is not allowed.1

Question :

n the West, it is possible for a person to open a variety of current accounts with high or low interest rates equally without any difficulty in both the cases. Is it permissible to open accounts with high interest rate with the understanding that the person will not demand the interest, if the bank denies it to him?
If it is not permissible, is there a solution that would allow them to open such an account knowing well that they, in their heart, are seeking the best interest?

Answer :

They are allowed to open the account in the bank and it is [also] permissible for them to deposit in it with the condition of earning the interest, if the bank is financed by non-Muslim governments or people.2

Question :

Banks in the West give loans —known as mortgage— to those who do not have enough money to buy houses; this is to be paid back in [weekly or monthly] instalments with a high rate of interest. Is a Muslim allowed to use this facility? If it is not permissible, is there a solution in your view for someone who claims that he needs the mortgage to buy his own residential house and does not possess enough money to pay for it?

Answer :

It is permissible to take the money from the bank that is financed by non-Muslim government or private funds but not with the intention of loan. The knowledge that the bank will sooner or later force him to pay the capital as well as the interest does not affect [the lawfulness of] his taking the money.3

Question :

Some trading and manufacturing companies get loans from private or state banks in Muslim countries and also from other [non-Muslim] institutions with the condition of interest; and they also earn interest on the deposits they leave in those banks. Are we allowed to buy shares from these companies or be partners in their ventures?

Answer :

If the partnership with them is like participating in their interest-bearing activities, it is not allowed. However, if Muslims own the company and it receives interest from the banks of non-Muslims, there is no problem [in buying its shares or partnership] from this perspective.4

Question :

Some governments and some companies in non-Muslim as well as Muslim, countries deposit the salaries of their employees directly into their accounts in the banks. The employee does not get the money in his hand, although he can withdraw it whenever he wants. Now, if the statement of his account shows that the money has surpassed his annual expenses, is khums obligatory on it?

Answer :

Khums is obligatory in what has surpassed his annual needs, except in the case of a government employee in a Muslim state that deposits his salary into a state or private bank. In the latter case, khums would not be obligatory on the salary that has been deposited in the bank until he [physically] takes possession of it with the permission of the mujtahid* Then the salary will be included in his income of that year and khums will become obligatory on what is in excess to that year’s expenses.5

Question :

Is it permissible to take bank prizes? Are they halal?

Answer :

If the bank embarks on such a process without imposing a condition on its customer when they deposit their money with it, rather encouraging them to increase their deposit and attract others to join in, it is permissible. It is also permissible for the person who wins a prize to accept it - as majhoulil malik - after getting the permission of the Marji', as a matter of ihtiyat. That is, if the bank was state owned or of joint ownership, he has the right of disposal over it after consulting the Marji'. If the bank, however, is owned by a private party, it is not necessary to obtain the permission of the Marji' to accept the prize and have the right of disposal over its money.
However, if the bank carries out such a free draw and gives the prize in fulfilment of a condition imposed by its customers in the loan contract or the like, it is not permissible to do so. It is not permissible, too, for the winner of the prize to accept it in fulfilment of the condition. It is permissible to accept it without the condition.6

Question :

Is it permissible to “shop around” for the bank or account, which offers us the best return rate on our money (Interest)?

Answer :

It is permissible in a non-Muslim country.7

Question :

What is your definition of Interest or as the Qur`an calls it, Riba (usury)? Does this term apply to all forms of profit, which are given/taken including banks and other institutions, or is there merely given as a “cost of living increase” and “inflation”? Can the Qur`anic definition of Riba be applied today to the Western banking structure?

Answer :

ll instances are considered Riba. However, taking interest from non-Muslim banks is permissible.8

Question :

Is it allowed to invest money in foreign banks?

Answer :

It is permissible.9

Question :

Is it permissible to work in a bank?

Answer :

If your job does not have anything to do with interest, there is no problem in it.

Interest Questions :

http://sistani.org/index.php?p=616687&id=1220

Question :

Is it permitted to pay interest to non-Muslims and also take interest from them?

Answer :

Giving interest to a non-Muslim in a deal that is based on interest is impermissible and receiving it (interest) is permissible and there is no objection in it.1

Question :

a) Is it permissible to deposit or borrow money from Muslim banks whereby the interest is either received or paid out?
b) Is the law of interest in borrowing/depositing similar with Muslim /non-Muslim banks?

Answer :

a): It is permissible to deposit money in a bank without prior condition for interest and it is as well permissible to take interest, if the bank in which money is deposited belongs to Muslims. If it belongs to government, it is permissible to take interest provided that half of the interest is given away to poor people (momeneen of them).

It is not permissible to take a loan from a national bank (bank owned by muslims) with interest. But if the bank is owned by government it is permissible to take loan with interest provided that taking loan should be with the intention of securing a property whose owner is unknown. Having taken the loan he considers it as a loan given to him on behalf of a Hakim Shara' (Islamic judge). Grand Ayatollah Seestani has permitted this.

b): Answered above.2

Question :

Is it permissible to receive interest from a non-Muslim bank? What about taking loan with interest, is it permissible?

Answer :

It is absolutely permissible to take interest from a non-Muslim bank. Even making a condition for obtaining interest is permissible. Taking a loan with an interest is not permissible unless one takes it with the intention of securing the money after which he considers it as loan given to him on behalf of Hakim Shar’a (Mujtahed).3

Question :

If I know that the bank will give me interest even without stipulating the conditions, is it permissible for me to deposit in a savings account that takes the form of a term-deposit?

Answer :

Yes, it is permissible, as long as you do not stipulate the conditions of interest.5

Question :

Is it permissible to take interest from unbelievers, especially for those who live in their countries?

Answer :

Yes, apparently one is allowed to take interest from the unbelievers whose property is not honored.6

Question :

Yes, apparently one is allowed to take interest from the unbelievers whose property is not honored.

Answer :

Taking mortgage with interest is not permissible but you can take the money of the unbelievers with the intention of securing the money (from their hands). Then, if you did not spend the money throughout a year, khums (1/5) would become obligatory and it would no longer be dealt with as loan.7

Question :

Can I take an urgent loan from a non-Muslim bank, even if I know that the bank will charge interest?

Answer :

If a Muslim intends to get a loan from such banks, it is necessary that he should do so with the intention that it is a transaction without return, even if he knows that he will end up paying the capital as well as the interest. And he should not do so with the intention of getting the loan with the condition of [paying] interest.

 
 

Rule 2088. Father and son, husband and wife can take interest from each other. Similarly, a Muslim can take interest from a non-Muslim who is not under protection of Islam. But a transaction involving interest with a non-Muslim who is under protection of Islam, is haraam. But after the transaction is completed, and the deal is closed, if payment of interest is permissible in the religion of that non-Muslim, a Muslim can receive interest from him.

 

 

BACK TO MAIN PAGE

 

      BANK CLASSIFICATION   Muslim Non Muslim Govt    
                   
In Oman muslim country                  
                         
1% Govt   51% Govt   0% Govt   No Info Govt * Iranian Bank
75% Muslim   40% Muslim   75% Muslim   Muslim    
24% Non Muslim   23% Non Muslim   25% Non Muslim   Non Muslim    
                         
                         
In India Non Muslim country                
                         
1% Govt   1% Govt   0% Govt   No Info Govt   Iranian Bank
24% Muslim   24% Muslim   2% Muslim   Muslim    
75% Non Muslim   75% Non Muslim   98% Non Muslim   Non Muslim    
                         
                         
                         
In IMuslim country(eg iran)                      
  Local Bank   International Bank                
                         
                         
                         
*if Ehtemal of Govt shares ?                    
                         
  FOR                      
  Taking Loans                      
                         
  Keeping Deposit