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Resolutions of Iftaa' Board

Resolution No.(49) "Ruling on Financing the "Diminishing Partnership" Offered by the Central Bank to its Employees"

Date Added : 16-12-2015

Resolution No.(49): "Ruling on Financing the "Diminishing Partnership" Offered by the Central Bank to its Employees"
Date: 24/4/1422 AH, corresponding to 15/7/2001.

What is the ruling of Islamic Sharia on the diminishing partnership system offered by the Central Bank to its employees?

Answer:

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

Over several sessions, the Board has reviewed the above issue and arrived at the following view:

Employees of Islamic banks and others can obtain dwellings by one of the following formulae:

First: Murabaha in favor of the purchaser where the employee covers the costs of the construction team; whereas, the bank covers the cost of materials which can be bought through the Murabaha transaction so that they become possessed and guaranteed by the bank. This formula can be employed for purchasing a flat or a building in line with the rules of Murabaha.

Second: Istisna` (making on customer`s order). Here, the bank provides the needed financing in line with the conditions of this form of transaction whereby a flat or a building could be built.

However, the formula, in the above question, presented to the Iftaa` Board: "The Diminishing Partnership" and the attached contract differ from a similar contract that had been approved by the Board where the law had defined it as: (The bank participates as a financing partner- partially or completely-in a project of an expected income on basis of agreeing with the other partner that the bank receives a percentage from the net of the actual income while maintaining the right to keep the remaining part of the profit or some of it, to be agreed upon, to cover the original amount of financing it had provided.) 

In other words, the income of the project, which is based on the aforementioned contract, is the one expected upon the conclusion of the contract itself and the determiner of the expected income is the market, after the completion of the project.

First: it isn`t permissible to estimate that revenue in relation to the financing amount provided by the bank, which settles it on basis of the diminished interest, as is the case of the contract presented to the Board. From the perspective of Sharia, that interest is unlawful although it is low.

In order for this formula to become valid, it isn`t correct to calculate the expected revenue in the manner mentioned above; rather, it should be left to the market.

Since the employees desire to have dwellings for residence and since these won`t be offered for leasing, then the Sharia alternative is that a committee of trustworthy and honorable experts estimate the rent of similar premises after the project is finished based on  actual estimation of the prices of similar houses and flats. In conclusion, it is imperative that the contract is rewritten on the basis that draws a distinction between the acceptable and the unacceptable form in Sharia, this is of course if the employee and the bank wish to resort to the above formula "The diminishing partnership", or they can simply resort to other formulae mentioned above. And Allah Knows Best.

 

Chairman of the Iftaa` Board, The Supreme Judge, Sheikh Izuldeen At-Tamimi

Dr. Abdulsalam Al-Abbadi

  Dr. Yousef Ghyzan

Dr. Wasif Al-Bakri

Sheikh Saeid Hijjawi

Dr. Abdulaziz Al-Khayat

Sheikh Na`eim Mujahid

  Dr. Mahmoud Abu Yahia

Sheikh Mahmoud Shewayat

 

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Summarized Fatawaa

What is the ruling on eating from one`s Udhiyah?

In the Name of Allah, and may peace and blessings be upon our Master, the Messenger of Allah.
 
The Udhiyah (sacrificial offering) is divided into two categories: the vowed sacrifice (Al-Mandhurah) and the voluntary sacrifice (Al-Tatawwu').
 
First: The Vowed Sacrifice (Al-Mandhurah)
This refers to a sacrifice that has become strictly obligatory due to a formal vow (Nadr). It is completely impermissible for the person offering it, or any members of their family whom they are financially obligated to maintain, to eat any of its meat or fat. Furthermore, it is unlawful for them to personally benefit from its hide, wool, or any other part of it. If they happen to eat any portion of it, the offerer is legally obligated to give an equivalent amount of meat or its monetary value to charity. (As noted in Tuhfat al-Muhtaj by Imam Ibn Hajar al-Haytami,Vol. 9/P.364).
 
Second: The Voluntary Sacrifice (Al-Tatawwu’)
This is a recommended, non-obligatory sacrifice. The person offering it is fully permitted to eat from its meat, distribute portions as charity to the poor, and give pieces as gifts to those who are well-off. However, it remains a mandatory requirement to donate at least a minor portion of it to charity; this should not be less than approximately half a kilogram of raw, uncooked meat. And Allah the Almighty Knows Best.

When does the time for the 'aqīqah lapse and pass?

All praise is due to Allah, and may peace and blessings be upon our Master, the Messenger of Allah.
If the guardian was financially capable (mūsir) during the majority of the postnatal period (nifās) — which is sixty days — then the obligation of the 'aqīqah remains upon him until the child reaches the age of maturity (bulūgh). Once the child reaches maturity, the demand falls away from the father and those like him. At that point, it becomes Sunnah for the child himself to perform the 'aqīqah on his own behalf.
However, if the guardian was financially incapable (mu'sir) during the postnatal period, and then became financially capable after its expiry — that is, after sixty days — the 'aqīqah is no longer required of him. And Allah Almighty knows best.

What is the ruling on discharging one's zakāh obligation through the provision of a specific benefit (manfa‘ah) — such as performing a surgical operation for a patient, or providing housing to a tenant, and counting the value of this service as zakāh?

All praise is due to Allah, and peace and blessings be upon our master, the Messenger of Allah ﷺ.
It is obligatory to pay zakāh from the actual asset (‘ayn al-māl) upon which zakāh is due, except in the case of zakāh on trade goods ('urūḍ at-tijārah), which is paid based on their monetary value. In all cases, zakāh must be given in the form of tamlīk (a full transfer of ownership), based on the words of Allah, the Mighty and Majestic (which mean): "Zakāh expenditures are only for the poor and for the needy, and for those employed to collect [zakāh], and for bringing hearts together [for Islam], and for freeing captives [or slaves], and for those in debt, and for the cause of Allah, and for the [stranded] traveler — an obligation [imposed] by Allah. And Allah is Knowing and Wise" [at-Tawbah/60]. The letter "lām" (لِ) in this verse — as in "lil-fuqarā'" ("for the poor") — indicates possession/ownership (lām al-milk).
It is not permissible to fulfill one's zakāh obligation by providing a benefit or service (manfa‘ah) — such as housing, education, or medical treatment — in place of the zakāh itself. This is because zakāh must be paid as wealth (māl) that is transferred into the ownership of the poor recipient, whereas such services are intangible benefits that are not, in themselves, capable of being formally transferred in ownership (ghayr qābilah lit-tamlīk). And Allah, the Exalted, knows best.

When is a child instructed to fast?

A child is instructed to fast at the age of seven if they are capable of fasting and have reached the age of discernment, by analogy to prayer. They should be encouraged but not forced, so they can become accustomed to it. It is obligatory for their guardian, whether a father or another, to instruct them.

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