Rulings for Having Shares in Banks and Other Institutions

Question:

Sheikh Muhammad Ibn Shalih Al ‘Uthaymeen was asked: What is the ruling for someone investing shares in banks and other institutions?

Answer:

[1]. If the investment is in places that are practicing usury such as banks, it is illegal for anyone to do such investment, since those bodies were built and run on usury as their bases. Even if there are legal transactions inside them, the numbers are very limited compared to the practices of usury committed by their employees.

[2]. But investment on transactions designed for industrial business, farms, and the like, basically is legal. However, there are also some dubious aspects here, since the surplus amount of their transactions were kept in banks, thus they will take the interest (usury) over that saving, or probably they withdraw several dirhams from the bank and the bank gives them the interests.

From this point, we say: “Indeed, the safer (wara’) attitude in this matter is for one not to invest their shares in such companies”. Indeed, Allah will bestow upon him provisions, if it is known that his intention to avoid such investment merely due to his wara (avoidance of illegal things) and his fear of falling into the dubious matters.

Concerning this condition, The Messenger of Allah – peace and blessings of Allah be upon him– said:

Which means: “Both legal and illegal things are evident but in between them there are doubtful (unclear) things and most of the people have no knowledge about them. So whoever saves himself from these doubtful (unclear) things, he saves his religion and his honour. And whoever indulges in these doubtful (unclear) things is like a shepherd who grazes (his animals) near the Hima (private pasture) of someone else, and at any moment he is liable to get in it.” (Narrated by Al Bukhari, The Book of Faith, in hadith no. 52. And Muslim, in the Book of Al Musaqah, hadith no. 1599)

But what is the solution for those who already invested their shares, or who previously wanted to do such, but he did not take the better way, which is the safer one?

Here we say: “Solution for such conditions is if he received his share of profits together with a cheque that explains the sources of the profits, then:

[a]. What comes from legal sources, is considered legal.

[b]. What comes from illegal source, for example if it is evidently revealed that the profits came from bank’s interests, must be avoided, by allocating the money for public or specific interest, not to be intended as a form of worship, but as a mean to free himself from sin, since even if he intended the spending as a kind of worship, it will not be regarded as worship in shari’a. Because Allah is The Holy One, and He wont accept things but the holy ones. And also, if he could not be saved from the sin, he probably would be rewarded for his sincerity and repentance.

[c]. If he did not get the cheque that explains the sources, then the better and more cautious way is to spend half from that profits (for public interest-trans.), while the rest is still legal for him. Because if the percentage or the measure of each legal or illegal is not known, while they resemble each other, then the more cautious way is to spend the half of it, so that none will commit oppression, nor being oppressed.

[Fatawa Mu’ashirah, page no. 55-57, taken from Fatwa issued by Sheikh Ibn Uthaymeen].

Rewritten and translated from the book titled “Al Fatawa Asy Syar’iyyah fi Al Masa’il Al Ashriyyah min Fatawa ‘Ulama Al Balad Al Haram, Indonesian Title: Fatwa-Fatwa Terkini 2, Publisher: Darul Haq)

Author: Sheikh Muhammad Ibn Shalih Al ‘Uthaymeen
Article of www.syaria.com

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