Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Asalam wa laikum Burham bhai,

Is Islamic Finance, Banking, Insurance accordingly to the laws of Shari`ah??

Please Advice.

AllahHafiz

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Islamic banking

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is no one (no idol, no person, no grave, no prophet, no imam, no dai, nobody!) worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 274-276: But those who devour ‘riba’ become like the one whom Shaitaan has bewitched and maddened by his touch. They have been condemned to this condition because they say, “Trade is just like ‘riba”, whereas Allah has made trade halaal and ‘riba’ haraam. Henceforth, if one abstains from taking ‘riba’ after receiving this admonition from his Lord, no legal action shall be taken against him regarding the ‘riba’ he had devoured before: his case shall ultimately go to Allah. But if one repeats the same crime even after this, he shall go to Hell, where he shall abide for ever! Allah deprives ‘riba’ of all blessing and develops charity, and Allah does not like an ungrateful, sinful person.

Beloved Brother in Islam, all the good Islamic banks and financial institutions have a Shariah Board of eminent scholars who are proficient in the laws of Islamic Economics and approve the principles behind every transaction or dealing of these banks. If an Islamic Bank or Islamic Financial Institution which is approved by the Central Bank of a Muslim Nation is offering a service, it would be safe for the believers to assume that their products would be halaal and permissible in its essence.

Although it is not always possible, nor is it required, that every believer be proficient in every law of Islamic Finance, one should have at least the basic understanding of which transactions are permissible and lawful in Islam, and which are not. If an institution claims to be running an operation according to the Laws of Shariah, and Allah forbid they intentionally deal in something which is against the Shariah Laws, the burden of sin will borne by them in the Court of Allah Subhanah.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your Brother in Islam,

Burhan