Question Summary:
Islamic Finance and Banking

Question Detail:

1) Can you buy car or housing using Islamic Finance?
2) Is Actuarial Science allowed as a career?
3) Can accountants apply for bank loans (interest chargeable) on behalf of clients? Can Accountants record bank loans and interest transactions in financial statements?
4) Can you charge a profit on a loan given?

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salamu ‘alaykum wa rahmatullahi wa-barakatuh.
1) One may purchase a car or property through Islamic modes of financing like Murabahah, Musharakah etc. However, it is important that the contracts that represent the various modes of Islamic finance must be Shariah Compliant as well. They should not be Islamic modes of financing by name while they lack the true essence of the concept in the contract and in the implementation.
2) [1]Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, finance and other industries and professions. Actuaries are professionals who are qualified in this field through education and experience.
In principle, active and direct participation in any unlawful venture is impermissible. Allah Ta'ala says,
و لا تعاونوا على الإثم و العدوان(النساء:٢)
Do not assist one another in sin and transgression (Nisa: 2)
An Actuarial Scientist doesn’t have an active or direct connection with anything unlawful. The responsibility of prohibition will solely be connected to those who participate directly in anything unlawful.
However, it would be advisable to choose any other career which doesn’t have direct or indirect connection to anything unlawful.
3) The same principle above will be applied in the case of an accountant applying for bank loans (interest chargeable) on behalf of clients. In this regard, it will be impermissible for an accountant to apply for a bank loan on behalf of his clients.
However, an accountant recording bank loans or an accountant recording financial statements of interest transactions will be permissible as there is no direct interaction to interest.
4) It is mentioned in the Quran:
احل الله البيع و حرم الربا
Allah has permitted trade and prohibited interest
In Shariah, interest in the above verse refers to taking a loan whereby one agrees to pay back at a later date with an excess.
Taking profit in lieu of a loan given falls under this type of interest. It is therefore impermissible and Haraam to charge a profit on a loan given.
And Allah Ta’ala Knows Best
Ismaeel Bassa
Student Darul Iftaa
Durban, South Africa
Checked and Approved by,
Mufti Ebrahim Desai.
www.daruliftaa.net