Financial practices and tailored support from Islam

Q221 :I used to support a regular amount of money to a bank in my home country and the bank added to it a commission on a regular basis. Had I retained all the amounts with me and transferred them now, I would have got much more in my home currency because of the difference in exchange rates over the years. Would the commission the bank credited to me be acceptable in the circumstances?

A221 : Numerous are the situations, practices and transactions that people may have to encounter in our sophisticated mode of living and for which they do not find an Islamic answer ready. Often people do not stop to think about the legality or otherwise of a particular situation or practice. They get involved in it but after the passage of a period of time, they start to think, "Is it permissible or not?" If they receive a negative answer they find it difficult to accept because the practice or the situation has become too familiar to them and they cannot do without it. If it is beneficial to them, they ask a scholar about it, trying to get from him a favorable answer. If they cannot, then they may go to another scholar or they may try to justify that practice for themselves. What we have to remember is that Islam cannot be tailored according to our own desires. Modern civilization has invented numerous financial practices without reference to Islam. Islam cannot, therefore, be expected to sanction every single one of these practices. It has its own values which shape the sort of society it aims to create. Therefore, if we wish to lead a life which is acceptable to Islam, we must abide by Islamic values. We cannot try to modify these values, in order to sanction certain benefits which we receive from un-Islamic practices. Moreover, modern civilization has established a world monetary system which is sometimes grossly unfair, particularly to poor people. Take, for examples, the parity of currencies. Sometimes, you feel that there is no logic or system which governs this parity. I will give you the example of two of the strongest currencies in the world, the American dollar and the British pound. In the late-seventies the pound lost much in value and went so low that at one point, a pound was worth only a few cents above one dollar. Nowadays, a pound fetches nearly two dollars. If you have to deal in these currencies, and you transfer money from one to the other, you are bound to either make heavy losses or substantial gains through no effort on your part other than the timing of exchanging your currency. The first question relates to such changes. My reader wishes he had not transferred any amount of money over the last few years. He would have received more by transferring them now. In order to compensate his loss, he seeks to legitimize the commission given to him by the bank. This is no excuse for accepting something which is not permissible in the first place. If this commission is halal, or permissible, it is not accepted by the rate of transfer. If it is forbidden to take, the rate of exchange does not alter that prohibition. Hence, we should look at the commission separately whether it is permissible or not. What is questionable, in this particular case, is the commission paid by the bank. Is it simply interest given another name? If so, then it is not permissible for my reader to take. He may, however, give it away to poor people or to charitable society or put it to some use which is beneficial to the whole society. On the other hand, if the bank uses the money transferred by my reader and gives a portion of the returns on the investment to its client, then this commission is permissible to take, provided that it is not guaranteed before hand at a particular rate. In other words, it should be related to the performance of the bank. If it is so, then it becomes permissible regardless of the rates of exchange. The same ruling applies to all money deposited in a bank.

Our Dialogue ( Source : Arab News - Jeddah )