Is it permissible or forbidden for banks to lend to an individual against his rights in his company, such that the lending takes place in the form of a commodity or shares that the bank sells on his behalf without the borrower seeing them, with a specific monthly amount deducted with interest?
The scenario mentioned in the question falls under the category of organized tawarruq practiced by some banks and companies, which is a deceptive maneuver to circumvent riba (usury) and is therefore prohibited. The Islamic Fiqh Academy has issued a ruling prohibiting this type of tawarruq, which involves selling a commodity to the mustawriq (the one seeking cash) for a deferred price, after which the bank undertakes to sell it on his behalf for an immediate cash price and delivers the cash to him.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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