What is the ruling on investing a sum of money in a bank that charges an annual operating fee of 6% of the total amount, knowing that the bank provides varying and inconsistent profits every three months?
For investment in banks and other financial institutions, three conditions are stipulated:
1. Knowledge of the Investment Field: One must ensure that the investment field is Islamically permissible, and that the bank does not invest in usury (riba) or usurious government bonds. This can be ascertained by reviewing the bank's financial report. 2. No Guarantee of Capital: The bank must not guarantee the return of capital in case of loss, unless it was the cause of the loss due to negligence or dereliction of duty. Otherwise, it would be considered a usurious loan. 3. Determination of Profit as a Proportional Share of the Profit: The investor's share must be determined as a known percentage of the profits (such as one-third or one-half), and not a fixed amount or a percentage of the capital, so that it is neither unknown nor Islamically invalid.
If the contract with the bank is a contract and the aforementioned conditions are met, then there is no objection to the investment. However, if the bank takes a percentage of the total amount as annual fees and all the profit belongs to the investor, this is an "investment agency" ( bi al-Istithmar) contract, which is permissible, provided that the investment field is permissible and the agent (bank) does not guarantee the capital, with a known fee specified for the bank.
Investing in usurious banks is prohibited due to the absence of the conditions for permissible investment.
Summarized from the full answer at Ftawy · imported
Read the full answer on Ftawyhttps://ftawy.com/en/questions/191661
Where this answer came from
- Source platform
- Ftawy
- Original fatwa ID
- 191661
- Imported
- Translation status
- Source text, unreviewed
- Read the full ruling
- Read the full answer on Ftawy