Rules Concerning Ribā

Imam Khamenei

Q1. What is ribā? And is the amount calculated as a percentage taken by the people who have deposits with the banks regarded as ribā?

A: As an expression, a ribā-bearing loan involves paying an extra amount by the borrower to the lender. The profits arising from the investment of the money deposited with a bank for safe keeping, which is used by the bank on behalf of the saver by virtue of an Islamic contract, is not considered ribā and, thus, is not problematic.

Q2. What are the boundaries of ribā-based transactions? And is it true that ribā is confined to loans?

A: Ribā can arise from selling and buying in the same way it may arise from a loan. Ribā arising from a sale transaction is to sell an item — normally sold by weight/ volume — in exchange for something of the same category in Islamic law plus extra.

Q3. Is ribā ḥarām across the board, i.e. for all legal/personal entities, or are there special cases?

A: Generally speaking, ribā is ḥarām, except for a ribā-bearing loan between a father and his child, between a man and his wife, and that taken by a Muslim from a non-Muslim who is not dhimmī.

Q4. Is it permissible to buy goods by installments for a price that is higher than the cash price? And does this amount to ribā?

A: There is no objection to selling and buying goods by installments for more than the cash price. The difference is not considered ribā.

Ayatollah Sistani

Interest

Q1: Can I take an urgent loan from a non-Muslim bank, even if I know that the bank will charge interest?

Answer: If a Muslim intends to get a loan from such banks, it is necessary that he should do so with the intention that it is a transaction without return, even if he knows that he will end up paying the capital as well as the interest. And he should not do so with the intention of getting the loan with the condition of [paying] interest.

Q2: Is it permissible to take interest from unbelievers, especially for those who live in a non-Muslim country?

Answer: It is permissible to receive interest from non-Muslims and their banks.

Q3: If I know that the bank will give me interest even without stipulating the conditions, is it permissible for me to deposit in a savings account that takes the form of a term-deposit?

Answer: Yes, it is permissible, if you do not stipulate the conditions of interest.

Q4: Is it permitted to pay interest to non-Muslims and also take interest from them?

Answer: Giving interest to a non-Muslim in a deal that is based on interest is impermissible and receiving it (interest) is permissible and there is no objection in it.

Ayatollah Makarem Shirazi

Bank Transactions Institutions of (Interest) Free Loans

Issue 1: Whatever individuals receive from banks under the title of interest free loans (Qardhul-Hassanah) and loans other than that and, then, something is added to the loan at the time of returning the amount to the bank, it is only lawful when the transaction is completed in a legal manner according to the methodology of Islamic agreements and there is no impression of interest.

Issue 2: There is no objection in taking interest from foreign and non-Muslim banks. It is unlawful to take interest from banks which belong to Muslims.

Issue 3: There is no objection in bank transfers (drafts, checks) from foreign banks, meaning that the bank or a businessman takes money from one country (or city) and transfers it to another bank or another individual in another country (or city) in order to receive a sum from (the one desiring the transfer). In exchange for this transfer (the banks) receive something from the owner of the money as compensation. This transaction is lawful whether the fee of the transfer is deducted from that transferred amount itself or the bank or businessman receives it in an independent manner.

Likewise, when the bank or another institution gives a sum to an individual and this individual transfers it in order to surrender it to another branch of this bank or another person in another place, if an amount of the money is taken as a gratuity fee for this transfer, there is no objection in it.

Issue 4: The fee which is received in offices of interest free loans in exchange for services which this office provides or (in charges it in order) to preserve and organize the accounts of instalments and compensation (of these instalments), there is no objection in it. However, the precaution is that the amount is appropriate for the volume of work and maintenance which the office bears, except that they are receiving a profit from the loan with the name of a gratuity fee.

Issue 5: Some interest free loan offices assign something from the (loan’s) principle for business’ activities or production (costs) in order to secure from its proceeds, the expenses of the office and the (expenses) of loans that are unpaid at times. This activity is only permitted when the owner of the money and deposits are knowledgeable of it and consent to it and (the bank) utilizes the proceeds of this investment only in the maintenance of the office.

Advanced Payment (Salaf) and its Conditions

Issue 6: A sale by advance payment is that the purchaser gives the payment in cash and takes possession of the commodity after a period. It suffices in realizing this type of sale that the purchaser says: I am giving this money, and I will take such and such amount of the commodity after six months, for example, and the seller says: I accept. Rather, even when the verbal Seeghah (contract) is not executed and the purchaser only gives a sum of money with this intention and the seller accepts this sum, the transaction is proper.