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Are we allowed to invest in banks that say they return profit on your investment as opposed to a fixed interest rate ?

Dated: 16/09/1984

Location: The London Mosque

Language: English

Audience: General

Are we allowed to invest in banks that say they return profit on your investment as opposed to a fixed interest rate ?

It is not the change of our pleasure. It is the change of practice which is significant and which has to be studied. If, for instance, all banks are compelled by the banking laws of various countries to deposit the bank’s money or a certain proportion of bank’s money into government banks with fixed rates, so their profit, whatever name they give it, would be at least partly interest.

So when they give somebody something in the name of profit, that interest which they would have received from the government, under compulsion of course, that would be a part of that profit. So if it is understood that that money which comes as interest is not to be treated as profit and it is to be diverted to other sources which are permissible in Islam, then there is no objection. Otherwise it will be still objectionable because if you mix even a drop of filth in milk, of course the whole milk becomes filthy.

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Updated on November 12, 2024

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