Islam view of banking system (interest)

bowsie casey

I know that in Islam, the collection and payment of interest by the banks is forbidden. However, if you live in a society like Ireland, where all the banks will charge you interest if you take out a loan, is it still wrong to look for a high-interest account to put your savings?

If not, you are being robbed by the banks, and have no way to try to get some money back from them. In my opinion, it should be possible to receive interest in a country like Ireland, as you have to deal with a different society, operating under different rules.

I would like to hear other people's opinion on this.

Also, what is the Islamic view on trading in the stock market ?

InFront

Hi Bowsiecasey. If we take "interest" to literally mean riba, then accepting or paying interest must be avoided. Riba-based loans are haraam (prohibited). The borrower is better off going to an Islamic bank who can deal specifically with a Muslim's financial requirements.

As regards storing personal funds, I know of one Irish bank who don't place interest into your account, once asked. If that is not always possible, the person could simply donate the interest to an Islamic charity for the benefit of the poor. But I suspect that not accepting riba in the first place would still be preferable.

In terms of stocks and shares, gambling and speculation are prohibited in Islam, but acquiring shares is not necessarily considered gambling. Trading on the stock market is in itself permissible, once in accordance with a number of conditions from the Shari'ah as outlined in this fatwa by the European Council for Fatwa and Research.

the_new_mr

Well, it all depends on what can be considered Riba (Usury). If any kind of interest is to be considered usury then it's not okay. On the other hand, some scholars state that bank interest is not usury. One scholar I heard once said that the fuwayed (Arabic for interest) is a new word in the Arabic language and that the entire modern day economic situation needs to be examined.

Personally speaking, I don't feel comfortable receiving interest from the banks in Ireland as I know that they invest in alcohol, porn etc. As for paying the bank interest, I'm of the opinion that it's okay as long as it's within sane limits (such as in a mortgage). God knows best.

Even scholars who say that paying any form of interest is wrong say that doing this in a non-Muslim country is okay since the person may have no other way to buy a house.

As for the stock market, I understand that it's permissible as long as the thing you're trading in is permissible. As in orange juice is okay, vodka is not

GerardKeating

bowsie casey wrote:

However, if you live in a society like Ireland, where all the banks will charge you interest if you take out a loan, is it still wrong to look for a high-interest account to put your savings?

Strictly following the rules of any religion or organised society can leave one at a loss. The rules are a statement of values, morals and/or ideals, you either agree with them or you do not.

Helicopter

found on the net once discussing islamic laws regarding banks, interests, trading stocks....but can't remember the site unfortunately.......may try searching for "Dow Jones Islamic" anyway....

if i remember correctly...as regards to stock trading or investments....it is not only the matter of what the company trades in that must be taken into account ( such as whether it deals in unislamic activities such as gambling, porn, alcohol...etc).....but also the trading method as well....e.g fixed returns investment is unislamic as the pfofit and losss between two involved parties are not balanced i.e 'one party acquires profit(the same rate) even if the other party acquires loss (a slump)

please check further if you are really concerned......though all in all...God knows if one is sincere and has put best efforts in adhering to His path...