Bank Interest

Rulings for Using the Bank Interest to Pay for Administration Fee

Rulings for Using the Bank Interest to Pay for Administration Fee

Assalamualaikum Warohmatullohi Wa Barokaatuh,

Ustadz, what is the ruling for using the bank’s interest to pay for interest tax or ATM card fee at the bank, is it considered as consuming usury? May Allah reward you with goodness.

Wassalamualaikum Warohmatullohi Wa Barokaatuh.

From: Abu Umair


Wa alaikumus salam Warohmatullohi Wa Barokaatuh

In the name of Allah, peace and prayer of Allah be upon His messenger.

The main principle that we should always pay attention to, is that the bank interest which was still inside the client’s account was not considered as his wealth. Therefore, the clients were not allowed to use that interest, in any kind of affairs which would benefit him in any form.

Regarding the tax problem, for example, there might be some taxpayers who felt wronged by the tax burdened to him. But he was not allowed to settle his tax obligation using the bank’s interest. Because the interest was not his, thus he shouldn’t use it for his own benefit. Whereas the principle that applies here is that we are not allowed to banish the injustice by oppressing others.

Dr. Muhammad Ali Ferkous – a scholar from Algeria- was asked about the ruling for paying taxes using the bank’s interest. His answer was,

أمّا إذا تولّدت على أمواله المودعة في البنك زيادة ربوية، فالواجب أن يتوب من ظلمه بأكله أموال الناس بالباطل، وتتوقف توبته على التخلص من المال الحرام الذي ليست له ولا للبنك صفة المالك، وإنما المال الحرام مال عام يرجع فيه إلى المرافق العامة، ومنافع المسلمين، ومصالحهم، أو الفقراء والمساكين عند تعذر ذلك بالنظر إلى عدم معرفة الأشخاص الذي ظلموا في هذه المعاملات الربوية وأخذت منهم زيادات ربوية.

“”If the money that is saved yields some interests (usury), then the owner should repent from his wrongdoing, since he devours other people wealth wrongly. The proof of his repentance is by him cleaning himself from unlawful wealth which is not belong to him nor the bank. But this unlawful money should be public property, which has to be returned to favor the public interest or to be given to the poor. Bearing in mind that it is impossible ( to return it to its real owner), since it is not known who was the wronged one in this usury transaction, and whose wealth was taken to provide that interest.”

Then he went on,

ولما كانت الزيادات الربوية مالا عاما يملكه عموم المسلمين، فلا يستطيع بملك الغير أن يسدّد به الضرائب التي فرضت عليه على وجه الاعتداء أيضا

“Because the usury money that was added (to the client’s account) is public money that belong to all muslims, then it is impossible for one of them to use other people’s money to pay for the taxes that become his obligation, which was also taken from him in a wrong way.”

– Taken from: fatwa no. 120

Likewise is the content of a fatwa issued in Fatawa Syabakah Islamiya under the guidance of Sheikh Dr. Abdullah al-Faqih. It is stated in its fatwa no. 23036: :

تغطية هذه الضرائب من فوائد البنك فلا يجوز، لما في دفعها من الحماية لماله، وبالتالي اتنفاعه من هذه الفوائد المحرمة

“Paying for taxes using the bank’s interest is not allowed, because that tax payment would give protection to the owner (payer’s) wealth, thus he had used this unlawful usury.”

We are all agree that the bank’s administration fee or any fee that is burdened to the client is an obligation that the client must pay to the bank, in return for the service the bank has provided him. Therefore, using the bank’s interest to cover the administration fee is similar to using the interest to cover our private necessities and it is something forbidden to do.

Allah knows best.

Answered by: Ustadz Ammi Nur Baits

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