How Is Zakat Calculated on Savings Held in Banks?
Shafi'i Fiqh
Answered by Shaykh Dr. Muhammad Abu Bakr Badhib
Question
How is Zakat calculated on savings held in banks?
Answer
In the name of Allah, and all praise is due to Allah, and blessings and peace be upon our master Muhammad, the Messenger of Allah, his Family, his Companions, and those who follow him.
Same Rule
We have previously addressed several questions regarding zakat, its payment, the minimum threshold (nisab), and related topics, including the ruling on dealing with conventional interest-based banks.
For savings (deposits) held in any bank or financial institution, the calculation of zakat follows the rules of zakat on gold and silver (known as zakat al-naqdayn). These rules also apply to cash currency since it serves the same function in transactions, buying and selling.
If the balance in the bank reaches the equivalent of the nisab of gold (24 karats) or exceeds it, and a full lunar year (hawl) has passed, then zakat becomes obligatory on this amount. The rate of zakat is 2.5% (one-quarter of a tenth). The account holder should calculate this amount and distribute it to the legitimate recipients of zakat.
Furthermore, the account holder must include all their bank accounts when calculating zakat. If they have multiple accounts in different banks, they must aggregate them, along with any cash in hand, in wallets, or stored in safes. In other words, they should sum up all their liquid assets, whether in the bank or elsewhere, as long as the total amount has reached the nisab and exceeds it.
And Allah is the source of success and guidance to the straight path.
[Shaykh] Dr. Muhammad Abu Bakr Badhib
Shaykh Dr Muhammad Abu Bakr Badhib is a prominent Islamic scholar from Yemen born in Shibam, Hadhramaut, in 1976. He received his degree in Shari‘a from Al-Ahqaf University, a master’s degree from the Islamic University of Beirut, and a PhD in Usul al-Din from Aligarh Muslim University (AMU).
He studied under great scholars such as Shaykh al-Habib Ahmad Mashhur al-Haddad, Shaykh Fadl Ba‘ fadl, Habib Salim al-Shatiri, Habib Ali Mashhur bin Hafeez, and others. He has served as the Director of Publications at Dar al-Fiqh, the former Deputy Director of Cultural Relations at Al-Ahqaf University, a former Assistant for Employee Affairs at Atiyah Iron Company, a researcher at the Sunna Center affiliated with the Dallah al-Baraka Foundation, and a researcher at Al-Furqan Foundation’s Makka al-Mukarrama and Madina al-Munawwara Encyclopedia branch.
Currently, he is a researcher at Al-Furqan Foundation’s Makka al-Mukarrama and Madina al-Munawwara Encyclopedia branch, teaches traditionally through the Ijaza system at Dar al-Fuqaha in Turkey, supervises the Arabic department at Nur al-Huda International Institute (SeekersGuidance), and is a member of the Board of Trustees of the Manuscript House in Istanbul.
His works include “The Efforts of Hadhramaut Jurists in Serving the Shafi‘i School,” “Contributions of Hadhramaut Scholars in Spreading Islam and its Sciences in India,” “Hada’iq al-Na‘im in Shafi‘i Fiqh,” in addition to verifying several books in Fiqh, history, the art of biographies, and Asanid (chains of narration).