Home > Fiqh, Money > Q&A Regarding Loans, Riba, Shares, Insurance, Working in Banks etc.

Q&A Regarding Loans, Riba, Shares, Insurance, Working in Banks etc.

These notes are compiled by Dr. Anwar Al Madani, professor at Islamic Online University and written by Sr. Naeema. I thought I might share as important financial issues that we may have to deal with at some point in our lives are addressed here:

These questions have been forwarded to scholars and Al-Lajna AlDaima,council responsible for answering questions that people ask .It is based in Saudia Arabia.Sh. Ibn Baz(May Allah have Rahmah on him) was once the head of it.

 Main Question

What is the hukm in the issues where there is difference of opinion?
Option 1:-Should we take the view which looks most likely to be correct ,where the daleel looks to be more eminent?
Option2:-Should we do what is most easy to follow and easy to do?
Answer:-If there is a daleel Shariah(from Quran /Sunnah)where it gives us the choice to either do the hard stuff or easy stuff.
Example of Fasting/Not Fasting while travelling :-Hadeeth of the prophet
“It is not the act of righteousness to fast while you are travelling”
Yet the prophet fasted while travelling ,while at other times ,he broke his fast while travelling, which shows that it is acceptable .
On the basis of this,we see ,that the scholars have differed ,whether it is ok to break fast while travelling ,or if one does fast ,whether it is acceptable or not.So here we are given a choice of breaking fast while in the month of Ramadan while travelling.So it is better to take which is easy in such cases ,if given a choice.
This has been narrated of the prophet(SAW)
“Whenever he was given a choice between one issue to be done in two ways,he would always choose the easy one,unless there was disobedience of Allah in choosing that easy one.If it was, he would be the most furthest away from that particular action,
From this it is obvious, that if you are given a choice,then you opt for what is easy,But if it a matter of finding which daleel is most right ,or , the scholars have differed ,then if you have that much of knowledge through which you can read the views of the scholars in a particular issue and you find that it is ok ,then it is fine,if not then, you go and ask the scholars.
Allah says in the Quran
“Go and ask people who are knowledgeable people(scholars), and they are going to provide you with information, if you are among those who do not know”
Then you should try to follow the scholars ,and if you still have doubts ,choose the safest option ,instead of going for the easy one .Allah knows best
So this is the basis on which we start this Q/A session

Some old Nasiyah from Sh. Ibn Baaz in his life time

He may have said this fatwah in the early part of his life ,years back,lived in Saudia Arabia.
“Unfortunately there is a lot advertisement in the local papers in Saudia Arabia.”If this is the situation of Saudia Arabia years back,then what would it may be now,if this is the situation is Makkah /Madinah,what will it be like in other places away from Makkah and Madinah.,if this is the situation where the flag itself carries “La Ilaha IllAllah”then what about the places where the flags have statues.If this is the situation where the majority population is Muslims,then what about the places where Muslims are in minority.”

Further he says
“People are invited and cheated ,to take part in interest dealing ,loans from banks ,become partners ,invest in such banks which is haram.”
Allah has warning for all this
“Be careful ,those who disobey the commands of Allah ,that maybe trial and afflictions will come or some severe punishments.”
From this it is obvious not to take part in those kinds of banks or to promote in any way,which are dealing in interest .It is all haram,and we should keep away from it.It is among the major sins,and it angers Allah and RasoolUllah.
In the Quran
“Oh Prophets ,eat from the food what is good and do righteousness,Indeed I am aware of what you are doing”
Also the prophet said narrated in Muslim

‘He mentions a man who is in travelling ,since its not easy to be way from one’s family ,so not easy totally dependent at the mercy of Allah .You have unkempt hair ,in the company of strangers,and calling Allah,but your food,drinks ,clothes are haram ,you are being sustained with haram means ,then
How will your duwa be accepted?
We know most of us may have indulged in haram transactions ,investments , in some part of our lives ,we should do Tauba.
Sheikh ibn Baz kept on giving advice .mentioning hadeeth as follows

“Keep way from seven killers “
Amongst one is Riba and other is eating wealth of orphans
Another narrated by Jabir ibn Abdullah
“Allah curses the one ,who eats usury ,those who give ,those who write it down and those who bear the witnessto it, they are all equal in the sin “
So many hadith that the Shiekh quoted about Riba,and encouraged us to do Halal and to keep away from things that are haram.
Many un-Islamic fatawas from people who justify the interest ,and make it look like halal.Make them look attractive.So we should be very careful and should be educated to know what is halal and what is haram.

Q1.I work in Ahle Bank(Saudia Arabia) which deals in interest.I was forced to work in the bank for 8 months as I could not find any other job. Although I was working there ,it was not a loan department ,so no dealing in interest ,but mostly current account side.Some people say ,that my wages are haram and to work in that bank is haram, where as others say that my wages are halal, since I am working to earn that wage , but working in the bank is haram
Answer:- Sheikh and the Al-Lajna AlDaima council have the view that it is haram to work in any bank that deals with interest. Because it is a place dealing with interest and you are working there,and supporting it.
“And do not support each other in activities which lead towards haram and acts of sinfulness.”
Regardless of whatever you work over there, be it just like a typist ,clerk,bearing the witnesses or ,writing of accounts ,or whatever all of them are haram ,and you should not work there and get out of that kind of work.

Q2.I have a son who owes 100,000 Saudi Riyals because of the marriage which he had ,and he had to spent some of that money in a car which he is using,and he entered in the bank as an employee where he is getting certain amount of money as wages,and he needs that wages to pay off his loan ,and he could not get any other job
Answer:-You are not allowed to work in any conventional bank dealing with interest. Leave it immediately and Allah will bless you with better opportunities .

Q3.I have got many places which are suitable to be hired by banks,commercial places etc.I have been approached by Bank-AlWatni(National bank) for hiring my building.Is it allowed?
Answer:-Not allowed ,since the bank is dealing in interest and it is haram to support them.

Q4.I used to have certain amount of shares in a company,way back 25 years ago that company got bankrupt .After that I invested in Riyadh bank.each share for 1000 Riyals,and now each share is for 30,000 riyals.I need my money .Am I allowed to take my share ,while the truth is that I was unaware that the Co. invested the money in the bank?
Answer:-Take all that you will get from your share.The original amount plus the profit.Take the original for yourself,while spend the profit obtained through haram means ,in the way of Allah and doTauba,and InshaAllah Allah will help you and support you
“And whoever fears Allah and put his affairs in His hands ,Allah opens doors for him,and Allah is going to sustain him from ways which he never may have thought.”

Q5.Me and my brother disputed on something because of certain amount of shares being offered in the market.I was of the view that it is haram ,but my brother said that it is ok.Is it allowed to invest in haram places.Also am I allowed to give him my name so he can use my name to invest in such places?.
Answer:-Not allowed ,neither to invest nor to give your name for investing in haram places.

Q6.I was working in a bank dealing in interest for six seven months.Some of my friends told me that I am not allowed to work in a bank.Now I changed my job and joined Saudi Airlines.What about the wages that I have earned during those months at work?Halal or haram to keep them?Do I have to do sadqa of that money?
Answer:-You have changed the job,and now you are doing a job which is halal,and whatever you took as wages is Ok ,enough for you is to do Tauba.

Q7.I have got shares in Al-Jazeera bank(Middle East Bank).I have received profit ,which I usually spent on my family ,whenever I received it .Now I want to sell my shares.One of the employees there has told me that I can sell all the shares ,and each share will be for 900 Riyals.But I have my doubts whether it is allowed or not?
Answer:-Sell all your shares to the bank and take whatever they offer,then take for yourself the amount which you invested originally ,and spend the rest in the path of Allah and do Tauba.
So we see that the questions may be different but the answers are more or less the same.which is to do Tauba.
Module 28 Video part a3

Q8. Is it allowed for me to be an investor in some other companies,where they deal in shares.
Answer:-Those companies which do not deal in interest ,then you are allowed to invest,but those who deal in interest ,then you are not allowed.But in case you are doubtful,where your money is being invested ,then it is better and safe to stay away from it.The Prophet said
“Keep away from what you have doubts and incline to those which you do not have doubts in”
Example:-In New Zealand, we find most of the companies ,where its very difficult to determine whether they are investing in halal areas or not.Kiwi Saver schemes ,where each person who takes part in it ,the Govt.supports it.Part of the investment is taken ,and also the company in which one is employed also contributes as per some ratio, and then it is invested on your behalf somewhere ,Allah knows best,and then you get the money when you retire or even before that.But it is haram, because it is very difficult to determine and find out where they are going to invest.
Riba and Haram things both not allowed.
You may be investing in a company which may have a factory which may be selling haram stuff etc.So Riba itself is haram ,and also investing in companies which do haram business like liquor factories ,swine farm.So Riba itself is haram and other forms of haram will come under the banner of haram .

Q9.There are companies which invite investors to invest ,plus investing in Insurance Co.Is it allowed?
Answer:-It is allowed to invest in companies which do not deal in interest,if they deal in interest ,then it is haram.As for conventional insurance,it is also haram to invest,because of Gharar(ambiguity),Riba etc.

Q10.Some of the companies you work for , they insure you for certain amount of treatments in the hospital ,for those who work in the companies and their families.For that these companies , pay the hospitals to insure this treatment for their workers as follows
Your company is going to pay on your behalf as part of some package deal. Monthly they pay the Hospital 100 Saudi Riyals /person,regardless of the amount of time you end up in the hospital.This is the amount paid on your behalf and the hospital is going to treat you,give you medications ,any form of operation if needed ,based on the amounts the company is paying for you.We know that there are times when that person may never go to the hospital,and at times he may go too many times,infact to the extent that he may undergo an operation costing thousands /tens of thousands of Riyals.All of this for 100 Riyals /month.
1. Is this medical Insurance acceptable in Islam or is there is something where there is ambiguity?
2. Does this fall in to a business called Al-J’ala or not?
3. What kind of Ta’wun /medical insurance is allowed and which one is not?
Answer:-Since the company pays for its employees certain amount to the hospital for each individual where the employees get free treatment .This is exactly like Al-Tameen Al-tijariya Almuharram /commercial insurance and it is haram ,because of the ambiguity(gharar) associated with it.Basicaly consuming wealth in haram way.This is unislamic and we should not do it.

As far as Takaful is concerned .It is ok and it is based on contribution and donation and it is ok.

Q11. What is the Islamic verdict on Tameen Al Saiha(Medical Insurance) in which you pay a certain amount of wealth to a company and this company insures your treatment ?
Answer:-It is one of the types of commercial insurance ,and it is haram ,because of the gharar/ambiguity attached to it.

Q12.Insurance on Driving Licence/ Tameen Al-Rukhsat.Due to accident the company will bear upto 3 million riyals .One only has to pay 365 Riyals /year.
Answer:-It means the person will 3,650 Riyals in 10 years only ,double it in 20 years 7,000 Riyals ,40 years 15,000 ,80 years 30,0000 Riyals ,its very rare that he lives beyond that time,and for that he is being insured for 3 million Riyals .This is haram as it is just like gambling (Maisir),and there are so many proofs for that.Sh.Muhd.Saleh (May allah have mercy on him)answered it.

Q13.Hukm for insurance for car accidents?
Answer:-Haram as it involves conventional insurance.Part of the Nsiyahy given was the hadith of the prophet (SAW)
“The person who refrains from something ,for the sake of Allah ,Allah(SWT) will provide him a substitute which is better for him.”
Because a person may spend that much of money and may not be benefitting from it at all,where as other people may benefit from it more than they may have paid for .
Module 28 Video part e

Q14.Special Cards/Membership Cards/similar to those issued by companies all over the world.What about a customer /member of such a card which offer discounts such as Teacher’s card.In Saudia Arabia they offer the teacher’s card for a certain fee.Once we become a member ,then we are eligible to avail discounts at hospitals ,hotels ,other places which acknowledge such cards
Answer :-Not allowed since there is a fee attached with a card,that fee is not acceptable Islamically ,which involves ambiguity ,taking people’s money through Batil(fraud),which is not halal.These cards should not be issued, neither are we allowed to be a member of such schemes.

Q15.I invested in Arajhi Bank.I gave them 3,500 Riyals for 35 shares. Now the price of those shares is 50,000 Riyals.The company has been distributing the profits to the share holders. Is the profit ok or not?
Answer:-If you have invested in a company ,which does not deal in interest ,then you are allowed to take your share ,but if it is dealing in interest ,then you are not allowed to invest in it ,neither are you allowed to take the extra profit.

Q16.Giving your name to somebody for investing purposes ?Isi t allowed?
Answer:-Not allowed.It is cheating

Q17.There are so many investment companies/banks who claim that are dealing with Shariah and investing your money Islamically ,take your money and invest ,and then take some percent 10% of the profit for themselves .Is it Islamic or not?
Answer:-Do not invest with banks(conventional) ,since they are found on Riba system.But if Islamic banks offer some products which is halal ,then there is no problem .It is allowed,if they take 10% out of the profit.

Q18.Is it allowed for us to deposit our money in saving accounts /deposit term in banks /companies etc.
Answer :-If they deal in interest ,then not ,otherwise if they deal as per Islamic terms and objectives,then it is allowed.

Q19.What about taking loans so that I can become a partner /investor in some companies?
Answer:-This question was asked from Sh.Uthaymeen .He says that
“To take loans so that you can invest in the share ,is among the stupidest acts of a person.”
Be it through interest or without interest ,regardless of that,the one with interest is even worse. You do not know whether you will gain any profit or not, then if not how will you give the money back to him. So you only try to invest what you already have.
Allah says
“For those people who are not able to afford means of getting married,then they should save their chastity,and safeguard themselves in the way which is described in Shariah, till Allah(SWT) gives them enough through which they can get married”
From this it is clear ,that Allah is not saying that those people who want to get married and they cannot ,they can go and take loans,though it is allowed ,and getting married is more important than getting richer.Yet Allah did not tell this.
The prophet(SAW) said to those people who could not afford to get married
“Oh young men,those who are able to afford the means of marriage should get married ,and those who are not able to ,they should fast.”
He did not say that they should take loans.Though, taking loans (Qard Hasna) at the time of need is allowed.It is very encouraged as per the hadith
“If a person gives twice in loans ,it is equal to the same amount of charity given once”
But only in the time of need,not because that you want to invest and get richer.You may lose it all,and then you may find it difficult to pay it back.We all ,may have taken some loans in some part of lives,and we know it keeps on bugging us till we pay it back,so its mentally and physically draining .The best person is one who does not owe any money to anyone, he lives with so much pride in him/her.May Allah bless us and gives us enough that we may survive upon, and do not need to take loans .It is a blessing from Allah to those who manage to survive without taking any loans.

  1. qais yunus
    July 31, 2011 at 6:08 am

    hellow i wanted to know if it is allowed to take a loan from an islamic bank that doesnt deal with interest so that i can buy a house that i can live in since the rents are getting more and more expensive hence me and my dad are finding it difficult to pay the rent on time. please guide me on this and please send me the answer via the email

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