What is the ruling on banks dealing with what is known as the parallel Salam contract, and what is an example of it?
Parallel Salam is the conclusion of two separate Salam contracts: the first for purchase and the second for sale, with the intention of executing the second using what was received from the first. It is permissible according to Islamic law and was mentioned by Imam Al-Shafi'i. Islamic banks can use it to purchase goods at a cheaper price through the first Salam contract, and then sell them through a parallel Salam contract to others, without linking the two contracts. This allows them to achieve profit and avoid price fluctuations.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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