The Appearance of Banks in the Muslim World

Figure 1A: An institution such as a bank is often taken for granted. These fixtures are very recent among Muslims

Figure 1A: An institution such as a bank is often taken for granted. These fixtures are very recent among Muslims.

The following question was put forward by one of the Muslims of Kazan, Russia by the name of `Abdul Karim ibn Damanla Muhammad Sadiq al-`Uthmani al-Qarghali on the date of 12 Dhul Hijjah 1331 AH:

Is it permissible to conduct transactions with the institutions called “banks” that have appeared?

The answer given by the marja`, Imam `Abdul Qadir ibn Badran ad-Dumi (d. 1346 AH), is as follows below:

The word “banks” is the plural of the word “bank,” which is a foreign word and came into the Turkish language as the word “baniq.” This is a word that has spread to Arabic now and is being used as a new expression, thus classed as a neologism.

This word does not appear in the books of fiqh either except those that have been authored in our time; with that being said, however the function of the word conveys, “the taking of a specific place for the purpose of placing money therein, this money belonging either to a designated number of individuals or to one specific individual and that being for the use of profit and this profit is calculated accordingly by the month or annually every year exponentially.”

Now it is not unknown for this to be calculated not only hourly but even according to the minutes. The rules of service have specific requirements and restrictions of service. Most of the merchants in the four corners of the Earth are transacting with banks with the exception of those whom Allah the Exalted has given success to them so that they do not have to do so.

The general ruling in the matter is that transacting with the bank is a branch of riba (usury) and what is more it is a number of branches of riba. Let us now consider our answer to the question asked as the reason for it is the presence of these institutions in the land of Russia. We will therefore focus our discussion just on the two issues of transacting with the bank and the fact that this is in the land of Russia.

I would like to begin from the outset with the statement that the land of Russia is indeed classed as Dar ul-Harb and its’ people are the people of Dar ul-Harb without any doubt – the only people not falling under this ruling being the Muslims domiciled there – as Muslims are not to be classed as people of Dar ul-Harb.

Al-`Allamah Ibn Nujaim mentioned in the text, Al-Bahr, which is a commentary on Al-Kanz under the statement (there is no riba between the Muslim and the unbeliever of Dar ul-Harb as profit),

“So there is no riba between them in Dar ul-Harb, which is a ruling contrary to that of Al-Qadi Abu Yusuf.

Likewise, when intoxicants, pork, meat found dead or their wealth deriving from gambling, for the Muslim to take from the wealth of all of that is permitted for the Muslim and the unbeliever of Dar ul-Harb based upon the hadith,

‘There is no riba between the Muslim and the unbeliever of Dar ul-Harb in Dar ul-Harb.’ [1]

So because their wealth is permitted and while there is a covenant of security between them, the wealth does not become protected except in the case that he has made an agreement that he will not seek to commit any treachery towards them and nor will he take any wealth that is in their hands without their permission.

When he takes wealth with their permission, what he has taken becomes permitted wealth without any excuse. So he owns it with the ruling of permissibility that was aforementioned only it is not concealed that he is only taking the judgement of the permissibility of the direct transaction when the Muslim is able to attain the increase in the transaction.

Riba is more general than that so that it is generally accepted that when the two dirhams are from the Muslim or the unbeliever, the answer to the question is that it is generally permitted from both directions as mentioned in Fath ul-Qadir.

The judgement on the one that has become a Muslim in Dar ul-Harb and did not make emigration is the same judgement as the one in Dar ul-Harb according to the ruling of Imam Abu Hanifah as his wealth is not protected according to the ruling of the Imam. The Muslim is permitted to take riba with him.

As for the case of the one that emigrated to us and then returned to them, it is not permissible for him to take riba with him as his wealth is now safeguarded in our land. So he has become from the people of Dar ul-Islam as was discussed in the texts Al-Jawharah and Al-Mujtaba based upon the need of taking what is sufficient for him:

The one seeking to transact with us along with the Muslim man that was or the individual from the People of the Book in their land or whoever became a Muslim there, he takes from the contracts that which is not permissible between us, like riba and selling meat found dead. This ruling becomes permissible to Imams Abu Hanifah and Muhammad ibn Al-Hasan ash-Shaibani, which is opposed to the ruling given by Abu Yusuf.”

Allah knows best about that matter. This is the expression given by the author of Al-Bahr and it is explicit in permitting banks when they exist in lands that are Dar ul-Harb. The same thing is the case when there were no banks in that land but the wealth from those who made the contracts of safety was made and transactions with the banks were made with their acceptance without any excuse according to the understanding that opening banks, permitting them in their midst for whoever wants to transaction with them and establishing the rates of interest is a clear proof on that they are pleased and consent to have them there.

As for in cases where the wealth was from the Muslims, then this matter requires clarification. In the case of Muslims that were transacting with one another in transactions of riba, this is not permitted by Consensus and this holds true for a Muslim who might transact with them.

Now if the Muslims had their banks and they were transacting with people of Dar ul-Harb alone, then there is no sin in that according to the ruling given by Imams Abu Hanifah and Muhammad ibn al-Hasan ash-Shaibani as we have previously mentioned.

However this would only be allowed on the condition that the increase of this transaction is from that which the Muslims attains as had just been explained not long ago. I would again quote the statement of Ibn Nujaim:

“The judgement on the one that has become a Muslim in Dar ul-Harb and did not make immigration is the same judgement as the one in Dar ul-Harb according to the ruling of Imam Abu Hanifah as his wealth is not protected according to the ruling of the Imam. The Muslim is permitted to take riba with him.

As for the case of the one that emigrated to us and then returned to them, it is not permissible for him to take riba with him as his wealth is now safeguarded in our land. So he has become from the people of Dar ul-Islam as was discussed in the texts Al-Jawharah and Al-Mujtaba based upon the need of taking what is sufficient for him:

The one seeking to transact with us along with the Muslim man that was or the individual from the People of the Book in their land or whoever became a Muslim there, he takes from the contracts that which is not permissible between us, like riba and selling meat found dead. This ruling becomes permissible to Imams Abu Hanifah and Muhammad ibn Al-Hasan ash-Shaibani, which is opposed to the ruling given by Abu Yusuf.”

Imami Twelver Shi`ah advocate that what was forbidden above is permitted, which was mentioned by Muhammad ibn al-Hasan ibn `Ali at-Tusi from the Imamis pointed out in his book, Al-Istibsar Fim Akhtalafa Fihi Min al-Akhbar:

“So in discussing the chapter that there is no riba between the Muslim and the people of Dar ul-Harb, there was a chain of transmission attributed to the Leader of the Believers (`Ali ibn Abi Talib, may Allah be pleased with him) who mentioned that the Messenger of Allah, peace and blessings of Allah be upon him, said,

‘There is no riba between us and the people of Harb. So we take from them one thousand dirhams with their dirham and we take it but we do not give back to them in like manner.’

As for what was narrated by Ahmad ibn Muhammad ibn `Isa with a chain of transmission to Abu Ja`far who said, ‘There is no riba between the man and his son nor between the man and his family. Riba is only in that which is between you and what you do not own.’ So I said, ‘The idol worshippers, between myself and them will occur riba?’ He remarked, ‘Yes.’

So I said, ‘They are slaves.’ He said, ‘But you do not own them. You only own them along with someone besides you and that which is between you and them is not from that as your slave is not like the slave of the one besides you.’

This means that there are two things to consider in this matter:

1. Those specified in the passage that covenant was made are from a tribe of the people of idolatry as they were idol worshippers and they entered under the ruling of those to pay Jizyah and the holding of the covenant of the Muslims was possessed by them.

In this case it was not permitted for there to be riba between ourselves and them and it was established that there were those among them who were from the people of Dar ul-Harb. This is established as what was in their hands was the right of the Muslims. They were not able to take it from them due to the power of these people and the weakness of the Muslims.

2. There is riba established between ourselves and then according to the understanding that they take from us by the extra proceeds and that they give us what is less than that. This is not permissible and the dispensation has only been narrated according to the narration that we take more from them and give them less and we don’t take from them less and give them more.”

The difference of opinion in this regard is connected to when Dar ul-Islam becomes a Dar ul-Harb. Imam Muhammad ibn Al-Hasan ash-Shaibani reported from Imam Abu Hanifah that Dar ul-Islam will become Dar ul-Harb when three conditions are met:

a. The laws of the unbelievers are held over the land and become widespread so that the judgements of Islam are not made in the land.

b. The land is connected to Dar ul-Harb in a way in which it is inseparable and cannot be connected to any of the lands of Islam.

c. That no believer or anyone of the People of the Book under Jizyah remains safe in the land due to the first condition coming into force – which is established before the conquest of the unbelievers – and this is for a Muslim in his Islam or someone of the People of the Book with his covenant of security.

So the points listed also have an additional three considerations and they are:

Whether the people of Dar ul-Harb conquer over one of our lands or the people of a land apostate and conquer and bring in the laws of kufr. Or the people under a covenant of security violate their covenant and you conquer over their land. So in all of these possible scenarios, the land does not become Dar ul-Harb unless the three conditions are met.

Imams Abu Yusuf and Muhammad ibn al-Hasan ash-Shaibani, may Allah have mercy on both of them, speak of one condition and no other. The land will become Dar ul-Harb if the laws of kufr are manifested and this is based on the principle of analogy.

So in the case where a land such as this becomes Dar ul-Harb, if the Imam had conquered it in the beginning and this was a land where the kharaj tax was taken or the `Ushri tax was taken, it goes back to being just that.

So when the Imam put down that this land was for kharaj before that, then it returns to being `Ashariyyah as has similarly been mentioned in As-Siraj ul-Wahhaj and was narrated thusly in Al-Fatawa al-Hindiyyah.

And Allah knows best.

Taken from meeraath website.


[1] Quoted by Imam Al-Baihaqi in his text, Al-Ma`rifah: Fi Kitab is-Siyar and classed by him as strange

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