Date : 13-07-2017

Question :

What is the ruling on buying gold via staff provident fund on Murabaha basis where the fund purchases the gold and sells it to the members of the staff by installments?

The Answer :

All perfect praise be to Allah, The Lord of the Worlds, and may His peace and blessings be upon our Prophet Muhammad and upon all his family and companions.

Islam has legislated special rulings for gold and silver transactions that set them apart from other commodities and services because they are the origin of every wealth. Among these rulings is selling like for like and making payment on the same spot. Prophet Mohammad(PBUH) said: " Do not sell gold for gold, except like for like, and don't increase something of it upon something; and don't sell silver unless like for like, and don't increase something of it upon something, and do not sell for ready money something to be given later."{Muslim}.

Al-Imam An-Nawawi(May Allah have mercy on him) said: " Muslim scholars have agreed that it is forbidden to sell ready gold for gold or silver to be given later."{Shareh Al-Nawawi Ala Muslim, 11/10}.

Accordingly, it is forbidden to sell gold by means of Murabaha contract in favor of the purchaser because the price is deferred and not paid on the same spot, and this is what constitutes forbidden usury since currency and gold share the price element which is the effective case of Riba(Ususry/interest). Therefore, it is forbidden to sell ready gold for money to be given later because the Prophet(PBUH) said: " Gold for gold is interest unless both hand over on the spot."{Related by Bukhari and Muslim}. And Allah knows best.