Q: I recently opened an Islamic Smart Account with FNB (South Africa). I would like to know if the profits paid on this account are indeed in compliance to the shariah and whether I may utilse the profits.
A: The Islamic Smart Account:
The money that is deposited into this account is ring-fenced (confined) and used by Wesbank Islamic Finance to operate their vehicle finance business, which is basically buying vehicles on behalf of people and reselling to them at a profit mark-up. The profit earned on these deals is distributed to the Smart Account investors (depositors) on a pro-rata basis, i.e. in accordance with the funds they hold in the Smart Account. Such a system is known in Shari’ah as mudhaarabah which means the investing of capital by one party and working that capital to earn profit by another party. So this is totally permissible.
Mufti Siraj Desai