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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

Is it permissible for one to give the Zakah (obligatory charity) to his indebted brother?

It is permissible for one to give the Zakah to his brother if he was indebted, or poor.

My husband wanted to sell a piece of land that was his own, but his father insisted that he transfer the land in his (the father’s) name so that he could sell it at a higher price. Then, my husband and his father would split the price. After my father-in-law sold the land, he denied everything and refused to acknowledge my husband’s right. My father-in-law passed away a year ago, and my husband’s brothers divided the inheritance, refusing to acknowledge that this land was a trust held by their father for my husband until it was sold. Are they sinful for knowingly denying that the land belongs to my husband, and what is the ruling on praying against them?
 
 
 
 
 

All perfect praise be to Alalh, The Lord of The Worlds, and may His Peace and Blessings be upon our Prophet Muhammad and upon all of his family and companions.
Among the rights of the deceased upon their heirs are: preparing them for burial at death, settling their debts, returning people’s rights to them, executing their will, and then dividing their estate. What was mentioned in the question falls under the rights of others, even if they are among the heirs, and the deceased is not absolved of it unless it is returned to its rightful owners. This is because Allah, Almighty, forbids consuming others' wealth/properties unjustly. However, do not give up on seeking a solution by involving righteous and well - respected individuals who may have influence over them, in the hope that Allah guides them to goodness and correctness. As for supplicating against them, the prayer of the oppressed is not rejected, even if the oppressed person is not a Muslim. And Allah knows best.
 
 
 
 
 

Is the one who gives up on marriage because he can`t afford it considered sinful?

Marriage is desirable, but one who can`t afford it isn`t considered sinful. However, he should supplicate to Allah, and seek His forgiveness.

I have mixed (halal and haram) money, and I want to purify it. My father is poor, and I want him, my mother, and my mother-in-law to perform Hajj, along with myself and my wife, as they need care due to their old age. Is it permissible to use this money for Hajj, or what should I do with it? Please advise.
 
 
 
 
 

If you knew the exact amount of unlawful money, then you should give as a charity, and if didn't then try to figure out the closest amount in order to give it as a charity. 
As for performing Hajj, perform it by using your lawful money. May Allah Bless you for being dutiful to your parents and your mother in law and for your attempt to serve them, And Allah Knows Best.

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