Islamic Verdicts - Volume III

Riba, Loans and working in banks

Riba, Loans and working in banks

Plotting to indulge in Riba

Q: I needed a sum of money to complete the building of my house in one of the cities of the Kingdom (of Saudi Arabia). So, I went to a person and requested him to give me a loan of whatever he could of money. He said to me, "I want to give you a car - we'll say that I sold a car to you." So, he gave me 12,000 riyals and he recorded it with him as 21,000 riyals. I did not see the car, nor do I know its color. He only recorded it on paper and he said, "You will pay 1,000 riyals every month." Since I was pleased with this deal at that time when I was in dire need of the money, and now I have paid only 8,500 riyals and 12,500 is the remaining balance, am I required to pay the amount of increase above his capital sum of money? I hope for a beneficial answer. May Allah reward you with good.

A: If the matter is as the questioner mentioned, then this transaction is invalid and indeed it contains a combination of Riba Al-Fadhl and Riba An-Nasi'ah. The person who paid the cash to you only gets the capital sum of his money, which is 12,000 riyals, because he did not give you the car nor did he sell it to you, based upon what you have mentioned. He only gave you cash for cash (in return), and this is an obvious evil and it is clearly Riba. Thus, you both must repent to Allah from this and not repeat this act again. We ask Allah to accept your repentance.

Ash-Shaykh Ibn Baz

Another Fatwa regarding plotting to indulge in Riba

Q: I have a number of bags of rice and they are in a storage facility that we have. People come to me and buy it from me for its price in the market and they loan it (the rice) to other people. Then when it becomes the possession of the debtor, I take it (the rice) back from him for one riyal less than what it was bought for from me. Then, some other people like them come after the rice is back with me and they buy it from me, and so forth. All the while, the rice is in one place, but they are considered to have received it while it is in its same place. Is this method sinful or not? Please give us a beneficial answer. May Allah reward you with good.

A: Yes, this method is a scheme to indulge in Riba. It is compounded Riba that combines between delayed payment and different commodities, meaning it combines between Riba Al-Fadhl and Riba An-Nasi'ah. This is because loaner is using this as a means of getting 12 for 10, for example. Sometimes the loaner and the debtor agree to this before they come to the owner of the shop. They agree that the loaner will loan him such-and-such amount of cash — like 10 for payment of 12 or more or less - then they come to this merchant to carry out this trickery with him. Shaykhul-Islam Ibn Taimiyyah called this Al-Heelah Ath-Thalathiyah (the Threesome Scheme). It is no doubt a scheme to practice Riba — Riba An-Nasi'ah and Riba Al-Fadhl - and thus it is forbidden and it is among the major sins. This is because the forbidden does not change to being allowed by scheming to carry it out. Rather, scheming to perform it increases it in wickedness and it increases it in sin. For this reason it has been mentioned from Ayyub As-Sakhtiyani that he said concerning these schemers: "Verily, they seek to deceive Allah just as they seek to deceive children. If they did the act forthright, it would have been lesser in sin." And what he said is true, may Allah have mercy on him. For verily, the schemer is in the position of the hypocrite who presents himself as a believer

while he is actually a disbeliever. This person is scheming to practice Riba while making it seem as though his sale is a correct and lawful sale.

Ash-Shaykh Ibn 'Uthaimin

He sold the Product for more than its Price for payment to be received later

Q: I bought a car for 12,100 riyals and I sold it for 14,100 riyals to be paid after a period of 5 months to give the buyer time. I would like a ruling as to whether this sale is included in the ruling of Riba or is it outside of what is considered Riba.

A: If the matter is as you have mentioned, then your selling this car is permissible if the sale occurred after you took possession of the car from the person who sold it to you. This is due to Allah's Statement: "O you who believe! When you contract a debt for a fixed period, write it down” (Al-Baqarah 2: 282).

This is also due to what is confirmed in the Two Sahihs from 'A'ishah (Radiyallahou 'an-a) that the Messenger of Allah (Salallahou 'aleyhi wa salam) bought some food from a Jew for a delayed payment and he gave him a coat of armor of steel as collateral. There is no Riba in this, if Allah wills, even if the price of the sold product is more than its equivalent price at the time of sale.

The Permanent Committee

The ruling on the Worker taking a Percentage of the Profit

Q: I have a friend who opened a small business and he recruited a worker from outside of the Kingdom (of Saudi Arabia) to work in it. He agreed with the worker on a monthly salary of 1,000 riyals and when the worker arrived in the Kingdom both parties canceled the first agreement and made a second agreement. The second agreement was that the owner of the shop would supply it products and items and everything that it would need would be specifically up to him to pay for, and the worker would work in the shop and take half of the profit. The capital wealth, meaning the shop with its items, would remain in the possession of the owner. With this, the income of the worker rose to 1,500 riyals (monthly). Is this legal Islamically?

A: There is no harm in this last agreement, which is that the worker takes a designated share of the profit, like half and so forth, and the remainder is for the owner of the shop along with the original possessions and wealth.

Ash-Shaykh Ibn Baz