Definition of Interest
Question :

What is the definition of Riba?

Answer :

Riba is the interest that the lender stipulates the borrower to pay in addition to the original amount of the loan, even if it is a small amount or decided after the loan contract took place.

Paying in Installments and Paying with Interest
Question :

I cannot understand the fundamental difference when purchasing something between paying in installments and paying on credit with interest. When I purchase any items in installments, I pay a higher amount than the normal price, and this is termed as interest. When I pay on credit, I pay later with interest. So what is the difference?

Answer :

The difference is that paying in installments is a purchase made for a specific agreed-upon price, albeit higher, over a set period; whereas buying on credit is a purchase of something for a fixed price, made through an interest-based loan, and as long as the loan is not fully repaid the interest will apply above the agreed-upon price. Therefore, paying in installments does not involve Riba as defined by the Sharia and is permissible, and paying on credit does involve Riba and is prohibited.

Getting Interests from Banks
Question :

If I deposit an amount in a bank and in return, after some time, I get an amount which is larger than my originally deposited amount, will it be considered Riba/Usury?

Answer :

Yes, it is considered as Riba and thus prohibited, since the permissible loan is when the borrower returns to the lender the same amount, without any stipulated interest. This applies if the bank is owned by Muslims. If it is not, then it is permissible to receive interest from it.

Purchasing in Installments
Question :

We require a new car, but we cannot afford to pay the whole amount together. There is an alternative way by which we pay in monthly installments, while we take possession of the car, and once all payments are made the ownership of the car is given to us; but the total price paid in the end is more than the price of the car if paid in cash, and the difference is known as interest. Is buying a car in this way permissible?

Answer :

It is permissible to buy a car in this way if the price was set and agreed upon at the time of the purchase, even though the total amount of the payments is more than the cash price at the time of the deal.

Learning and Teaching Interest
Question :

Is learning and teaching about interest entries in accounting lessons, as a student or teacher, prohibited?

Answer :

Such teaching or learning is permissible.

Provident Fund
Question :

The company I am working in is providing the service of "Provident Fund". As per company policy it deducts 10% from my basic salary. When I retire, it will give back double the amount. Is it permissible to sign up for this?

Answer :

If the owners of the company are non-Muslims, then it is permissible to use this service. If they are Muslims, then it is not permissible.

Treasury Bills
Question :

What is the Islamic ruling on treasury bills?
Treasury bills are given when you lend money to the government and expect it to be returned with interest at the end of a specified period.

Answer :

It is permissible to make use of the treasury bills, and one must not intend to make a deal with the government, but rather intend to make use of this mechanism. When collecting the money, it should be on behalf of the religious ruler i.e. the Marja.

Interest Charged on Loans
Question :

What are the rulings regarding interest charged on loans to cushion against inflation and loss of value of currency and to cater for this inflation and loss of value?

Answer :

Conventionally, lending is based on a specific numerical value of a currency, not the market rate of that value. For example, if $100 is borrowed, $100 is to be returned, despite any increase or decrease of the value of the dollar or any inflation. Therefore, any interest charge on a loan to cushion against inflation and loss of value is regarded as interest and the rulings pertaining to interest applies.
It is not permissible to take interest from private Muslim banks. It is permissible from banks owned by the government, but one must not intend to have a contractual relationship, and when the interest money is received, one should receive it on behalf of the Marjia. It is also permissible to receive interest from non-Muslim banks.

Taking Interst from Non-Muslims
Question :

You mentioned that it is permissible to take interest from non-Muslim banks, while it is not permissible to do so with Muslim banks. On the other hand, interest is forbidden in the Quran absolutely. How can this be explained?

Answer :

Almighty Allah has made it prohibited to deal with interest in general, but the traditions of the Prophet and the Ahlulbait (peace be upon them all) can explain certain exemptions to this general ruling. It has been reported in these narrations that there is no prohibition in dealing with interest between a husband and his wife and between a father and his son, and it is permissible to take interest from non-Muslims.
The real reason behind such rulings have not been explained in the narrations. The wisdom behind the latter exception could be that non-Muslims accept such dealings for themselves, as they give and take interest in their dealings without hesitation or seeing anything wrong with it.

Buying a House
Question :

I need to buy a house, and there is a company which lends money and charges interest. Can I take a loan from them?

Answer :

It is not permissible to take a loan with interest.

Interest
Question :

I want to start a business to sell motorcycles, I will offer the option for the customers to buy in installments over a set period of months, and the total sum received in installments will be more than the cash price. Will the extra amount be considered as usury? What is the case if I allow the deferment of the payment to a later time, similarly for a higher price than the immediate cash price?

Answer :

If the contract is based on delaying the payment of the price, even if the total installments amount to more than the cash price, it is valid and it is not considered as usury or interest. In addition, it is permissible to receive the total payment at the end of a designated period.

Selling Hair
Question :

Some women sell their hair to Muslims or non-Muslims and receive some money or some other useful items from them in exchange. Is it permissible to do this?

Answer :

Yes, it is permissible.

Stock Exchange
Question :

Is it permissible to buy and sell shares of companies in the Canadian and US stock exchanges?

Answer :

Yes, it is permissible; but it is not permissible to buy shares of companies that deal with prohibited matters like wine and pig and the like, if the buyer becomes a partner in owning such things.

Vegetables in Private Land
Question :

If vegetables are grown in a private field which is not fenced and there is public access to it, is it permissible for anyone to take and consume the vegetables without asking?

Answer :

If one passes through cultivated land that is owned by someone but not fenced, he is permitted to eat from it without damaging it or taking any plantings.

Fruits of the Neighbors
Question :

If the fruit of a tree is growing in the yard of a neighbor, and into our yard or the street over the fence, is it allowed to consume them without permission?

Answer :

It is permissible to consume them if one is sure of the owner's agreement. Otherwise, it is not permissible.

Increased Price
Question :

I was requested by a friend to buy a product for him. Is it permissible for me to add a margin for myself and give him the increased price?

Answer :

It is prohibited to do so, without his consent.

Gold Rings
Question :

If a man had gold rings in the past and now realizes that they cannot be worn by him, can he sell them or exchange them for women’s gold jewelry?

Answer :

Yes, it is permissible.

Buying or Consuming Lawful Food
Question :

Is it allowed to buy or consume lawful food or drink, that is manufactured or processed by a company that manufactures or processes unlawful food or drink as well?

Answer :

If the products themselves are lawful to consume, then it is permissible to purchase them and consume them.

The Transactions of the Child
Question :

I understand from the books of His Eminence that the buyer and seller in a transaction have to be adults (baligh). Does this mean that parents cannot send their children to the store to buy something? Or children in school cannot buy food from the cafeteria?

Answer :

It is permissible for the child to buy or sell if it was with the consent of the guardian.

Currency Exchange
Question :

Is it allowed for Muslims to deal in currencies in the foreign currency exchange market?

Answer :

Yes, it is permissible.