Darul Iftaa Mahmudiyyah

Please advise if it is acceptable to approach a conventional bank to effect an asset based transaction where the interest rate and the period of re-payment is fixed?

· 27 Jumada I 1421 AH1 min readFatwa 645English

Question

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Please advise if it is acceptable to approach a conventional bank to effect an asset based transaction where the interest rate and the period of re-payment is fixed?

Answer

If the conventional bank offers a loan on interest, it is not permissible even if the interest rate is fixed. The Qur'aan expressly prohibits every form of interest.

However, if the bank proposes to purchase the asset and resell it to the client on a fixed profit, then it will be permissible. The addition on the purchase amount will be a profit on sales and not interest.

and Allah Ta'ala Knows Best

Mufti Ebrahim Desai

Answered by
Mufti Ebrahim Desai
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Source: Darul Iftaa Mahmudiyyah — https://askimam.org/public/question_detail/645
Fatawa SA: https://fatawa.co.za/fatwa/askimam-645

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