Question Summary:
I distributed the article below which I got from the web on Interest. However, my older brother has posed the following question below. Kindly guide us accordingly

Question Detail:

I distributed the article below which I got from the web on Interest. However, my older brother has posed the following question below. Kindly guide us accordingly
 
“What about getting funds from a bank on Shariah bases even though we know that the banks deals with interest?
Another words they will give us funds on Shariah however they source to give us funds come from interest? Like FNB Islamic bank do”
 
“
Taking Loan from a bank that deals with interest to buy a house?

Question:
 
Is it allowed for me to take out a loan (Mortgage) from a bank that deals with interest to buy a house? Benefit us may Allaah reward you with good.
 
Answer:
 
Even if you were in dire need of eating a piece of bread to save yourself from death still don't borrow anything from the bank whatsoever, let alone buying a house or a car. When one is in a adverse situation forced by circumstance (severe hunger) Allaah has made lawful for you al-Maitah (dead animals), and the flesh of swine, and that which has been killed by a violent blow or by a headlong fall; yet ar-Ribaa (interest) has not been allowed for you, interest is very dangerous, very dangerous. So don't deal with interest and be patient; since Allaah the Perfect and the Most High mentions:
 
And whosoever fears Allaah and keeps his duty to Him, He will make a way for him to get out (from every difficulty). And He will provide him from (sources) he never could imagine. And whosoever puts his trust in Allaah, then He will suffice him. (Surah At-Talaq 65:2-3)
 
So dealing with interest is a grave sin, a dangerous matter and the one who makes it allowable has disbelieved. Therefore if you are in need of a house then be patient until Allaah provides it for you, seek refuge in Allaah and utilise the necessary means until Allaah paves the way for you to obtain a house. Either that or you die being free from waging war against Allaah. Since the Muraabi (the one who deals with interest) is warring with Allaah - and Allaahs refuge is sought - as Allaah the Perfect and the Most High mentions:
 
And if you do not do it, then take a notice of war from Allaah and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums). (Surah al-Baqarah 2:279)
 
He (Allaah) declares war upon the people of ar-Ribaa (interest) and "the Messenger of Allaah (sallAllaahu alayhi wa sallam) cursed the usurper of interest, the one who pays it, the one who records it and the two witnesses to it."
[Reported by Muslim in his Sahih (11/36 no.1598 - Nawawi) from the Hadith of Jaabir radiallaahu 'anhu]
 
What do you want after the curse?! Will the house benefit you when you are in front of the Hellfire?! So the believer should fear Allaah and should have patience upon his destitution and his need; for indeed Allaah the Perfect and the Most High mentions:
 
And certainly, We shall test you with something of fear, hunger, loss of wealth, lives and fruits, but give glad tidings to the patient ones. (Surah al-Baqarah 2:155)
Be patient and Allaah will give you this mighty reward instead of exposing yourself to His curse, His anger, His wrath and His punishment. Bear this severity in the world for it is nothing in comparison to the anger of Allaah and His punishment.
 
We ask Allaah that He protects us by His grace and favour from everything that incurs His anger and wrath. Indeed our Lord is All-Hearing of our supplications. And may the blessings of Allaah and peace be upon our prophet Muhammad, his family and upon his companions.
”

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In the name of Allāh, Most Gracious, Most Merciful

Assalāmu ῾alaykum wa Rahmatullāhi Wabarakātuh
 
In principle, it is permissible for Muslims to deal with non Muslims. Assuming Muslims were not allowed to deal with non Muslims, this would lead to lots of difficulties. Living in this material world, the need will arise for us to interact with non Muslims and to transact with them.
The confusion amongst the Muslims regarding the impermissibility of dealing with the bank stems out from the type of transaction they had entered into. It is impermissible for a Muslim to enter into any transaction with the bank which involves paying or receiving of Interest. If there is no involvement in interest, the transaction will be permissible as long it is Shari’ah compliant.
Just as it is permissible for Muslims to deal with non Muslim out of the banking system, it will also be permissible to deal with them within the banking system, as long as there is no transgression to the laws of Shari’ah.
Consider the following examples:
·         If it is permissible for a non Muslim to purchase a property and to sell it to a Muslim for a profit (Murabahah), why will it not be permissible for the bank (non Muslim) to purchase a property and sell it to a Muslim on a Murabahah basis?
·         If it is permissible for a Muslim to enter into a partnership with a non Muslim (as long as everything is Shari’ah compliant), why will it not be permissible for Muslim to enter into a partnership with the bank?
Islamic finance is a window within the conventional bank. This window has been created to serve the needs of the Muslim community. This does not necessitate that every transaction in the bank itself is Shari’ah compliant.
Presently the most common methods of Islamic finance are 1) Murabahah and 2) Mudarabah.
1) Murabahah - The bank purchases the property for e.g. R500 000, 00. The bank then inflates the price of the property and offers it to the client at R750 000, 00 on differed payment. This is a transaction (not an interest bearing loan) and according to the laws of Shari’ah.
2) Mudarabah – The client enters into a partnership with bank on this basis; the client will provide the funds and appoint the bank to administer these funds by investing it (in Halaal avenues) and acquiring a profit. Thereafter, at the end of the term according to the percentage set out, the profits will be divided between the partners (i.e. the client and the bank). This is also in accordance to the laws of Shari’ah.
There are also other methods of issuing Islamic finance to the public.
We hope this clears your doubts regarding the issue of Islamic finance within a conventional bank and gives you a broader understanding on the Issue.
We apologise for the belated response. If you have any further queries, feel free to forward them to the Darul Ifta.
And Allāh Ta῾āla Knows Best
Wassalāmu ῾alaykum 


Ml. Rayhaan Docrat,
Student Dārul Iftā


Checked and Approved by:
Mufti Ebrahim Desai
Dārul Iftā, Madrasah In῾āmiyyah