Darul Uloom Trinidad & Tobago

Dear Sheikh,

I have gotten conflicting views about employment in the bank industry. It is said that the income is a mixed income and not strictly Riba based because the bank does a substantial amount  of investing, shares etc which results in millions of dollars in profits. People compare it to the government public servants, officials etc whose income is regarded as being halal although the government generates alot of money from the gambling industry. I am seeking clarification on this issue especially in regards to whether someone must resign with immediate effect losing all benefits and permanent status in the bank.

Answer: Assalaamu Alaikum,

Banks make their bulk of money by lending on interest and so, most of the revenue of the bank come from interest bearing activities.

They make money from credit cards, saving accounts, debit cards, checking accounts, mortgages, home financing, loans, certificates of deposits etc.

The majority of the revenue of the bank thus, comes from interest based activities. The income which comes from personal service fees, and value added services etc. is minimal, and these are not the main activities of the bank. In fact, the main function of commercial banks are accepting deposits from the public and advancing their loans. When banks advance loans to customers, they charge interest from the borrowers and this is the main source of their income. So, the main business of a bank is lending and collecting interest. They cannot survive on anything besides their interest based revenue. From this, they pay their salaries and other expenses, and will continue to be profitable as long as they are making money from the interest they charge.

With respect to a bank’s income from investment and shares which takes place at the bank on a small scale, no significant income comes from this, except in the case of an investment bank. In all these cases, it is essential for one to know where the bank invests its monies, and in which companies the banks buy shares, before one can assume that income from this activity is Halaal. Muslims should know that banks are not guided by religious laws, hence, they will invest in places which yield a good profit, without giving consideration to what is lawful or unlawful according to religious guidelines.

Since the banks’ main objective is to deal in Riba (interest), to promote it, and to propagate it, all the reliable and authentic scholars of Islam have considered it totally Haraam to work in this industry. One who works in a conventional non Islamic bank is being a support and help to a haram system which Allah Has out rightly condemned, and his income will also be haram. (This is because of the fact that either salaries are paid entirely from the income received from interest, or (even if the income is mixed with interest and non interest monies), the income generated from interest bearing activities are much more. This being in the majority means that the majority of one’s salary will be from Riba sources, which makes it totally haram).

In this respect, the great scholar Mufti Khalid  Saifullah Rahmani has written, ‘Work and transactions in the bank are based upon Riba (interest), and interest based work and transactions are all Haraam. The Messenger of Allah has cursed one who takes interest; one who pays interest; one who writes a transaction of interest; the witnesses who witness such transactions and those through whom such transactions take place’ (Abu Dawood; Tirmidhi; Ibn Majah). The reason for such ‘curse’ is that all the above mentioned individuals are rendering assistance to interest based transactions. Those who work at the bank are involved in documentation and accounting, and in all other activities of  interest based transactions. Hence, they fall into the different categories of those who have been cursed in the hadith, and are direct helpers and supporters of this grave sin. It is therefore, not permissible to work at the bank.’ (Kitabul Fatawa Vol. 5 Pg. 392 Zam Zam Publishers Karachi 2008).

Many other great scholars and leading Muftis have also given the same Fatawa (verdict) regarding working in the bank. These are all documented in their respective books of Fatawas.

As for the government income, their revenues are earned through different sources which are halaal and good. The government earns revenues from:

• State owned enterprises.
• State assets.
• Fines collected.
• Rents, concessions, royalties collected.
• Fees for the granting of permits/licenses.

The bulk of the government’s revenue comes from personal/individual taxes; payroll taxes; corporate taxes; custom duties; imports/exports; taxes on goods and services provided.

From these revenues that come into the government, salaries are paid to the workers and all other expenses are fulfilled. The government does not use gambling as a source of generating income. Whatever financial gains are derived from gambling, they are paid into the Sports and Culture Fund. It is therefore totally wrong to compare working in the banking industry to that of working for the government. The banks survive on Riba, while the Government has numerous sources of generating halaal revenues.

Seeing that banks are direct instruments for promoting Riba and for building and forcing Riba upon people, and that Riba is a grave sin in Islam, a Muslim must not work in such places. The advice given by all Islamic scholars is that if a Muslim is employed at a non Islamic bank, then he/she must seek another means of livelihood which is halaal and resign from working at the bank, since the salaries received from working in the bank is considered to be Haraam (as explained before). This point has been made very clear in the words of the former grand Mufti of Pakistan, Mufti Rasheed Ahmad (A.R). He wrote, ‘Profits and income which come into the bank are predominant and mostly from Riba (interest) and other such transactions which are deemed unlawful in Islam. Since it is a well known principle that salaries of workers are paid from the profits and income of a company, it means that workers in a bank will be paid from the profits made on account of Riba (interest) and other unlawful transactions. Hence, the salaries received will be Haraam.’ (Ahsanul Fatawa Vol. 7 Pg. 22 H.M Saeed Company Karachi 1425 A.H).

With respect to ‘losing the benefits’, the question should be asked as to what ‘a Muslim should do with benefits that are based on haram?’
Allah is the provider of everything, and one will not lose anything if one does something in order to obey Allah and follow the teachings of the sacred Shariah.

Though it may seem as if one is losing something, in reality, one will certainly gain much more from Allah, since one is leaving that which is prohibited to go to that which is lawful.

And Allah Knows Best.

Mufti Waseem Khan.

7/11/2014.