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Receiving Funding from a Commercial Bank

Ustadh Tabraze Azam is asked about receiving start-up funding from a bank that deals in riba.

I am a revert to Islam doing my Bachelor’s in Computer Science and have been given a project in my field of study by a start-up (let’s call it X). X works in the domain of Computer Science. The owner of X is told that if you complete this project, we may get you funds to start your own company.

X is funded by a bank and, Insha Allah, if I am able to complete the project and be able to start my company, which would be of course dealing with Computer Science, then it will also be funded by the same bank dealing in riba.

Is it permissible for me to go for that startup even if my company-to-be will be doing halal work but will be funded by a riba-earning bank?

Jazak Allah khayr for answering.

Yes, it is permitted to accept funding and remuneration from a conventional bank, particularly when it is an institution which isn’t required to follow the dictates of the Sacred Law (shari‘a).

Among the primary sources of capital for a bank is the cash deposited by its customers. Common interest payments or usurious transactions (riba) would normally form only a portion of the money a bank has at its disposal.

Normally, two matters would dictate the permissibility of employment: (a) the line of work itself, and (b) the source of remuneration. When both matters are acceptable, the line of work is deemed lawful.

(Mufti Taqi Usmani, Fiqh al-Buyu‘: 2.1027/1033)

Please also see Bank Employment When is it Permissible? and Is It Permissible to Work on the Projects of a Riba (Usury) Based Bank? and Working for a Company Providing IT Solutions in Un-Islamic Markets.

And Allah Most High knows best.

Wassalam,

Tabraze Azam

Are Chit Funds Allowed in Islam?

Ustadh Salman Younas is asked whether chit funds, the practice of pooling money and deciding who should receive the funds by lot, is permissible.

Question:

Assalam alaykum wa rahmat Allah wa barakatuh.

I want to know if chit funds are allowed in Islam. I’m referring to a chit fund where a group of people pool in a certain fixed amount of money every month and each month one of them is picked to receive the money that’s collected in a lump sum. The one to receive the money each month is selected by drawing lots.

Answer:

Wa alaykum assalam wa rahmat Allah wa barakatuh.

This would be permitted if there is no subtraction in the amount of the lump sum that is to be given to the individual whose name is drawn.

If a subtraction is made in order to pay a fee to the organizer or to distribute as commission among members, this would be akin to interest and impermissible. The rulings of interest apply because a chit fund is partly a borrowing scheme where some members act as creditors and others as debtors.

(Khalid Rahmani, Jadid Fiqhi Masa’il; Aziz Ahmad Qasmi, Chit Fund ke Islami Ahkam)

Salman

Checked and approved by Shaykh Faraz Rabbani.


How to Avoid Usury When Exchanging Currencies?

Answered by Shaykh Umer Mian

Question: Assalamu alaykum

I get paid at work in a foreign currency and I always have to convert my salary to our local currency. I am trying to ensure I am not engaged in usury so I am confused on what rate I should use for the conversion. Shall I use the rate I was paid in or shall I use the current rate that the bank is willing to change the currency for as at that day?

Answer: Wa alaikum as-salam wa rahmatullahi wa barakatuhu

Exchanging the currencies of different countries does not entail riba, and it is generally permissible at any rate agreed upon by the two parties. However, in some countries there is a government-mandated exchange rate. If this is the case in your country, you would be obligated to exchange at that rate. This is because one must obey the laws of one’s country in all matters that are not contrary to Shariah. For details, please read the article below.

Trading in Currencies – by Mufti Muhammad ibn Adam

Wassalam,
[Shaykh] Umer Mian

What Is the Legal Reason for Interest According to the Hanafi School?

Answered by Ustadh Tabraze Azam

Question: Assalam alaykum

What is, according to the Hanafi school, the legal reason for interest?

I’m referring to the interest with money, not the interest with the six items mentioned in the hadith. Also if the legal reason (‘illa) isn’t present then will the prohibition still remain? And if so, why?

Answer: Assalamu alaikum wa rahmatullah,

Usury or interest (riba), defined as a contractually-stipulated specified increase for one of the transacting parties, is categorically impermissible. This excess is the legal reason (‘illa) for its prohibition, as understood from the legal terms: amount (qadr) and genus (jins).

Allah Most High says, “O believers! Fear Allah, and give up outstanding interest if you are true believers. If you do not, then beware of a war with Allah and His Messenger! But if you repent, you may retain your principal. Do no wrong and you will not be wronged.” [2:278-279]

This is irrespective of its being termed “interest” in the contract or otherwise as what counts is the meaning aforementioned, and not the presence of the word itself in a given context.

Contemporary jurists (fuqaha) have explained that fiat currencies are considered to be genera of intrinsic value (athman). As a consequence, all rulings related to gold and silver will apply similarly to, for example, USD, GBP and all others. This is the position that was chosen by the Islamic Fiqh Councils (al-majma‘ al-fiqh al-islami) of Makka and India. Other interpretations also exist, but the conclusions are effectively the same.

Otherwise, you are correct in that [normally] the ruling (hukm) stands as long as the legal cause or reason is present; and if absent, the ruling, too, would no longer apply. There are obviously a number of nuances in these discussions, but I think this is sufficient to answer your question.

[Maydani, al-Lubab fi Sharh al-Kitab (253); Halabi, Multaqa al-Abhur (410); Ibn ‘Abidin, Radd al-Muhtar ‘ala al-Durr al-Mukhtar; Usmani, Fiqh al-Buyu‘ (2.693); Fatawa Fiqhiyya Mu‘asira (136)]

Please also see: How to Avoid Riba (Usury): A Reader and: How Do I Get Rid Of Haram Money?

And consider taking the following free course.

And Allah Most High alone knows best.

wassalam,

[Ustadh] Tabraze Azam

Checked and Approved by Shaykh Faraz Rabbani

Ustadh Tabraze Azam holds a BSc in Computer Science from the University of Leicester, where he also served as the President of the Islamic Society. He memorised the entire Qur’an in his hometown of Ipswich at the tender age of sixteen, and has since studied the Islamic Sciences in traditional settings in the UK, Jordan and Turkey. He is currently pursuing advanced studies in Jordan, where he is presently based with his family.

How Can I Repay a Huge Debt Without Falling Into Usury?

Answered by Shaykh Umer Mian

Question: Assalamu alaykum

I am in a huge debt so in order to pay my while debt I am borrowing money from my brother for a 2 years period. I also have a business of 20% share.

Can I offer my full profit to my brother as a return yearly after getting my profit?

Answer: Wa alaikum as-salam wa rahmatullahi wa barakatuhu

Linguistically, the word “riba” in Arabic means an “increment” or an “addition.” In Islamic sacred law, Riba (usury) is defined as follows:

( الفصل السادس في تفسير الربا وأحكامه ) وهو في الشرع عبارة عن فضل مال لا يقابله عوض في معاوضة مال بمال (الفتاوى الهندية، كتاب البيوع)

“In Islamic sacred law, riba is an amount of wealth contractually exchanged without any equivalent” (al-Fatawa al-Hindiyyah, Kitab al-Buyu’, Fasl fi tafsir al-Riba wa ahkamihi).

The companion Sayyiduna Fudhala ibn Ubayd (Allah be pleased with him) defines Riba in the following words:

“Any lending arrangement which derives benefit is riba.” (Sunan al-Bayhaqi, also see: Ibn Nujaym, al-Ashbah wa al-Naza’ir, Ibn Abidin, Radd al-Muhtar, 5/166).

Hence, any extra payment on a loan is considered to be Riba and therefore unlawful.

In light of the above, you should not stipulate that your brother receives a portion of your profit as repayment for the loan. What if the profit received turns out to be more than the loan amount? The extra amount would be riba. Instead, you should stipulate in the contract and intend to repay the loan in the exact amount received from your brother.

Wassalam,
[Shaykh] Umer Mian

Can I Invest in a Fund That Accumulates Interest? [Video]

Answered by Shaykh Faraz Rabbani

Question: Assalamu alaykum

Can I invest in a fund that accumulates interest?

Answer:  Wa’leykum Salam,

Here is a video answer by Shaykh Faraz Rabbani to this question:

Shaykh Faraz Rabbani is a scholar and researcher of Islamic law and Executive Director of SeekersHub Global After ten years overseas, Shaykh Faraz returned to Canada in the Summer of 2007. In May 2008 he founded SeekersHub Global to deal with the urgent need to spread Islamic knowledge—both online and on the ground—in a reliable, relevant, inspiring, and accessible manner. He has been repeatedly listed as one of the world’s 500 most influential Muslims (The Muslim500).

Is Bonus Money From a Company Usury (Riba)?

Answered by Ustadh Salman Younas

Question: Some time back I signed up for an online design website. I paid a designer to make a logo and then when I received a logo the website sent me an email giving me a £5 bonus as I am a new member. I have not used that money and now I am planning to look for a designer for a new project at that same website and I am wondering if it’s permissible for me to do so? And is that bonus money permissible to use?

Answer: Assalamu alaykum

This would not be considered riba (usury/interest). Rather, it would be legally viewed as a gift from the company/website, which is permissible for you to take.

The elements that constitute interest are not present in the above transaction, such as a loan, a stipulated amount on top of the principal, and so forth. Thus, it does not relate to the issue of interest.

Wassalam,
[Ustadh] Salman Younas

Checked and Approved by Shaykh Faraz Rabbani

Ustadh Salman Younas graduated from Stony Brook University with a degree in Political Science and Religious Studies. After studying the Islamic sciences online and with local scholars in New York, Ustadh Salman moved to Amman. There he studies Islamic law, legal methodology, belief, hadith methodology, logic, Arabic, and tafsir.

Am I Sinful to Live With a Husband Who Is Not Concerned With Avoiding Usury?

Answered by Shaykh Umer Mian

Question: My husband does not listen to my financial advice and we have to pay interest every month. For him it is not a problem and discussing this issue makes him very angry. What is my religious responsibility in this situation as I have to use his credit card? Should I get a job to avoid these issues despite having kids?

Answer: As-salam alaikum wa rahmatullahi wa barakatuhu

The essential problem here is that your husband does not appear to take riba (usury) seriously and regard it as the grave sin that it is. Riba (usury) has been clearly and explicitly prohibited in the Qur’an and Sunnah. The Holy Qur’an has declared war on those who do not abstain from this grave sin. Regarding this, the scholars point out that of all types of sins and sinners, only two people have a declaration of war from Allah: the one involved with riba (as in the verse below) and the one who harms a wali (friend) of Allah.

Allah Most High says:

“Those who swallow usury cannot rise up save as he arises whom the devil has prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah permitted trading and forbidden usury. He unto whom an admonition from his Lord comes, and (he) refrains (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returns (to usury) – Such are rightful owners of the Fire. They will abide therein.

Allah has blighted usury and made charity fruitful. Allah loves not the impious and guilty.

Lo! those who believe and do good works and establish worship and pay the poor-due, their reward is with their Lord and there shall no fear come upon them neither shall they grieve.

O ye who believe! Observe your duty to Allah, and give up what remains (due to you) from usury, if ye are (in truth) believers.

And if ye do not, then be warned of war (against you) from Allah and His Messenger. And if ye repent, then ye have your principal (without interest). Wrong not, and ye shall not be wronged.” [Qur’an, 2.275-279]

The scholars of Qur’anic interpretation, such as Imam Alusi (Allah have mercy on him) have explained ‘Allah has blighted usury,’ as meaning that Allah, “Removes all baraka (blessing) from it, and destroys the wealth of the one who enters into it.” [Alusi, Tafsir Ruh al-Ma`ani, 3.51]

Ibn Mas`ud (Allah be pleased with him) related that the Prophet (Allah bless him and give him peace) said, “Usurious money, even if much, becomes paltry in the end.” [Ahmad, Ibn Maja, and Hakim, with a rigorously authentic chain of transmission].

Abdullah bin Handhalah (Allah be pleased with him) related that the Prophet (Allah bless him and give him peace) said: “A single coin of usury taken by a person knowingly (i.e. knowing it to be usurious) is worse than committing adultery 36 times.” [Ahmad, al-Daraqutni, and al-Bayhaqi].

Therefore, you should continue to attempt to convince your husband to avoid riba and avoid the means that lead to it (e.g. spending beyond one’s means). In doing so, you should use wisdom and good manners. Depending on the situation, this may entail remaining silent about the issue of riba itself, while you gently encourage your husband to improve spiritually, increase in sacred knowledge, and draw nearer to Allah. When this begins to happen, your husband will naturally incline towards eliminating the haram from your lives. Also, you may want to consider enlisting the help of someone who has influence over your husband such as his parent, sibling, community leader, or religious scholar.

With regards to you working, you should know that the sacred law places full responsibility for financial support of the wife and children upon the husband. A husband cannot force his wife to work outside the home, and she does not have to obey him if he commands her to do so. For further details, please read Shaykh Nuh Keller’s article “What is the meaning of qawwamuna as used in Surat al-Nisa’, verse 34?,” available at Masud.co.uk. Furthermore, Abdullah bin Umar (Allah be pleased with them both) narrates that the Prophet (Allah bless him and give him peace) said: “Women are the overseers of their husbands’ households and children, and they are responsible for them” [Bukhari and Muslim]. In light of this, if you feel that working outside the home and leaving the children at daycare would cause them worldly or spiritual harm, then it would be wrong to do so. This is because it entails leaving your responsibility (i.e. safeguarding the children) for something that is not your responsibility (i.e. working outside the home). Furthermore, perhaps if you went to work and earned additional income it would only lead to a commensurate increase in spending (as is often the case in our time), and the household would still require usurious credit to cover the expenses. Hence, you should focus on rectifying the root cause of the problem, which is your husband’s lack of concern for the grave sin of riba.

Finally, after taking all worldly means to resolve this situation, you should not forget the greatest means of all: turning to Allah, the One who brings ease after hardship. This can be done by increasing in all forms of worship such as prayer, dhikr, fasting, giving sadaqah (charity), etc. In particular, prayer and supplication in the last third of the night is one of the greatest means for one’s requests to be answered. Also, the Messenger of Allah (Allah bless him and give him peace) taught us to make the prayer of need (salah al-hajah) for any worldly or other-worldly need that we have. The prayer of need is very simple: It is essentially to raise one’s need to Allah Most High, by performing ritual ablution (wudu), praying 2 rakats (or four), and then making whole-hearted dua to Allah. Any dua is acceptable, but duas that have been transmitted in the Sunnah are best. The dua which has been specifically transmitted in relation to the prayer of need (as recorded by Tirmidhi and Ibn Majah) is as follows:

لا إِلَهَ إِلا اللَّهُ الْحَلِيمُ الْكَرِيمُ
سُبْحَانَ اللَّهِ رَبِّ الْعَرْشِ الْعَظِيمِ


الْحَمْدُ لِلَّهِ رَبِّ الْعَالَمِين
أَسْأَلُكَ مُوجِبَاتِ رَحْمَتِكَ وَعَزَائِمَ مَغْفِرَتِكَ وَالْغَنِيمَةَ مِنْ كُلِّ بِرٍّ وَالسَّلامَةَ مِنْ كُلّ إِثْمٍ
لا تَدَعْ لِي ذَنْبًا إِلا غَفَرْتَهُ وَلا هَمًّا إِلا فَرَّجْتَهُ وَلا حَاجَةً هِيَ لَكَ رِضًا إِلا قَضَيْتَهَا يَا أَرْحَمَ الرَّاحِمِينَ

There there no god but Allah the Clement and Wise.
There is no god but Allah the High and Mighty.
Glory be to Allah, Lord of the Tremendous Throne.
All praise is to Allah, Lord of the worlds.
I ask you (O Allah) everything that leads to your mercy, and your tremendous forgiveness, enrichment in all good, and freedom from all sin.
Do not leave a sin of mine (O Allah), except that you forgive it, nor any concern except that you create for it an opening, nor any need in which there is your good pleasure except that you fulfill it, O Most Merciful!”

Wassalam,

Umer

Photo: B Rosen

Am I Falling Into Usury by Trying to Get a Job Using My Relationships?

Answered by Shaykh Umer Mian

Question: As Salam Alaykum,

I applied for a position in a company my friend is employed at. I asked him to speak to the manager so I can get an interview. I feel I have fallen into riba (usury) because I am bypassing the fair and equitable market process. Should I be concerned?

Answer:Wa alaikum as-salam wa rahmatullahi wa barakatuhu

Linguistically, the word “riba” in Arabic means an “increment” or an “addition.” In Islamic sacred law, Riba (usury) is defined as follows:

( الفصل السادس في تفسير الربا وأحكامه ) وهو في الشرع عبارة عن فضل مال لا يقابله عوض في معاوضة مال بمال (الفتاوى الهندية، كتاب البيوع)

“In Islamic sacred law, riba is an amount of wealth contractually exchanged without any equivalent” (al-Fatawa al-Hindiyyah, Kitab al-Buyu’, Fasl fi tafsir al-Riba wa ahkamihi).

Hence, in order for riba to occur, there must first be a contractual exchange of wealth, whether money or goods. In your case, this has not occurred—all your friend has done is advocate on your behalf. This is not riba. To the contrary, it is highly praiseworthy in Islam to advocate on behalf of a Muslim to assist him in a permissible affair (such as getting a permissible job). Allah Most High says:

مَنْ يَشْفَعْ شَفَاعَةً حَسَنَةً يَكُنْ لَهُ نَصِيبٌ مِنْهَا (النساء 85)

“Whoso interveneth in a good cause will have the reward thereof” (Qur’an 4:85).

When a questioner or someone in need would come to the Messenger of Allah (sallAllahu alaihi wa sallam), he is reported to have said:


عن أبي موسى عن النبي صلى الله عليه وسلم أنه كان إذا أتاه السائل أو صاحب الحاجة قال : ” اشفعوا فلتؤجروا ويقضي الله على لسان رسوله ما شاء ” . متفق عليه

“Advocate (on behalf of your brother), for you will be rewarded, and Allah will cause His Messenger to judge according to what He wills” (Narrated by Abu Musa al-Ash’ari and recorded by Bukhari and Muslim).

Wassalam,
Umer

Photo: frankieleon