EMI

Answered as per Hanafi Fiqh by Askimam.org

Assalaamu Alaykum Mufti Saheb, There are many eCommerce sites like amazon which is offering No Cost EMI wherein no Interest is charged to the customer but it is charged to the vendor(amazon). However, recently RBI(Reserve Bank of India) has passed a rule stating that No Cost EMI is not legal and the Banks needs to charge the interest to the customers. Hence to deal with this, what vendors like amazon is doing is they are giving the amount equal to interest as Upfront discount. Below is the message from Amazon. Note: The bank will continue to charge interest on No Cost EMI plans as per existing rates. However, the interest to be charged by the bank will be passed on to you as an upfront discount. For example, The cost of the product is Rs.6000/- and the interest charged by the bank is Rs.500/- . What amazon does is, it gives Rs.500/- as discount to the customer and hence the effective price paid by the customer will be Rs.6000/- only (The customer pays Rs.6500/- to the bank, but Rs.500/- is given to him by amazon. Hence he ends up paying only Rs.6000/- from his pocket). Is this transaction halal? Jazakallahu Khayra

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, it is not permissible to enter into an interest-based transaction.[1]

In the enquired scenario the transaction between the customer and the bank will be considered as an interest-bearing transaction, irrespective of the vendor granting a discounted amount. Therefore the transaction is impermissible.

And Allah Ta’āla Knows Best

Ahmed-Ur-Rahmaan Ibn Mufti Mohammed Patel (Rahimahullah)

Student Darul Iftaa

Azaadville, Johannesburg, South Africa

Checked and Approved by,
Mufti Ebrahim Desai.

 


[1] يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ ٱتَّقُوا۟ ٱللَّهَ وَذَرُوا۟ مَا بَقِىَ مِنَ ٱلرِّبَوٰٓا۟ إِن كُنتُم مُّؤْمِنِينَ * فَإِن لَّمْ تَفْعَلُوا۟ فَأْذَنُوا۟ بِحَرْبٍ مِّنَ ٱللَّهِ وَرَسُولِهِۦ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَٰلِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ (سورة البقرة278-279)

 

ياأَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا الرِّبَا أَضْعَافًا مُّضَاعَفَةً ۖ وَاتَّقُوا اللَّهَ لَعَلَّكُمْ تُفْلِحُونَ (سورة آل عمران 130)

 

عَوْنِ بْنِ أَبِي جُحَيْفَةَ، قَالَ رَأَيْتُ أَبِي اشْتَرَى عَبْدًا حَجَّامًا، فَسَأَلْتُهُ فَقَالَ نَهَى النَّبِيُّ صلى الله عليه وسلم عَنْ ثَمَنِ الْكَلْبِ، وَثَمَنِ الدَّمِ، وَنَهَى عَنِ الْوَاشِمَةِ وَالْمَوْشُومَةِ، وَآكِلِ الرِّبَا، وَمُوكِلِهِ، وَلَعَنَ الْمُصَوِّرَ‏.(صحيح البخارى 2086)

 

 

 

This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

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