Stocks & shares: Buying & selling

Q616 :I believed that it is permissible for a Muslim to buy, own and sell shares and stocks. On this basis, I confidently brought some shares in a newly opened bank in my country. Recently, a friend led me to understand that having such shares cannot be permissible because the bank operates usurious transactions. I would be grateful for your view. Perhaps, I should say that I am willing to forgo all rights to these shares.

A616 : It is certainly permissible to invest one's money in buying and selling shares, provided that the shares you buy or sell are that of a business that is permissible to operate. Thus, it is perfectly permissible to own shares in a furniture company, an iron and steel corporation, a supermarket, a travel agency, a computer business, etc. The list is endless. It is not permissible, however, to own shares in a wine company, a brewery, a gambling shop, etc. because all these either sell things that are forbidden or provide services that are also forbidden. That makes any profits earned from such business forbidden to have. A bank that operates on the capitalist system of finance belongs to this second category, because much of its operations are interest charging. When you buy shares in a bank, you are actually owning a portion of that bank which means you are involved in all its operations. In a way, you are actually helping in all its operation. Therefore, it is forbidden to own shares in a bank where interest is the basis for most of its transactions. What I have mentioned applies to buying shares in the bank itself, which means that you are a shareholder of the bank. This is different from the service operated by many banks nowadays, where the bank is an agent, buying and selling stocks and shares for customers in different companies. If those companies are engaged in permissible trade and rendering permissible services, then there is nothing wrong with dealing with them. Even this bank operation itself is permissible, because it is simply a service agency. You only need to make sure that the companies in which the bank buys shares for you do some legitimate business. If your shares are in the bank itself, you simply need to get rid of them. You only need to offer them for sale, and there will be some purchasers to give you the market value for that. It is not in your interest or in the interest of Islam or the Muslim community to forgo the shares in the bank without claiming the price you paid for them, or their market price.

Our Dialogue ( Source : Arab News - Jeddah )