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IS IT PERMISSIBLE TO USE THE LOYALTY AWARDS FROM A BANK?

Answered according to Hanafi Fiqh by DarulUloomTT.net

QUESTION:

As Salaam Alaikum,

Bank charge a specific amount of money when you make a transfer, the bank has policy if you keep a balance of 50000 during a month, it credit you back the charges to your account by name of loyalty award, it is Halal or Haram. Also in the end of every month it credit to my account some money by name of dividend, it is Halal or Haram. Jazakumollah Khairan.

ANSWER:

Wa Alaikum As Salaam,

The charges which the bank credits back to your account in the name of ‘Loyalty award’ is halal, since it is not interest. This service of the bank is really one of the many incentives which a bank offers to customers. Like this, the bank normally introduces loyalty programs to incentivize customers in an effort to drive customer loyalty, to attract customers and also to retain them.

Therefore, whatever charges you paid for the transfer, the bank gave it back to you by crediting it to your account to recognize your ‘Loyalty’ to them in maintaining a balance of $50,000. during the month. This is halal for you to use and benefit from.

With respect to the ‘dividend’ which is credited to your bank account, this is basically the same as an interest payment. Therefore, it is interest which is being paid to your account in the name of ‘dividend’. Using this amount is unlawful for you. It must be understood however, that the term ‘dividend’ is generally used by companies and businesses, and it refers to a profit or reward given to shareholders and investors. Seeing that it is a portion of a profit from an investment or a business, ‘the dividend’ received will be halal/permissible for one to use (when the business or investment is halal).

However, a bank does not become involve in businesses, investments, sales, transactions etc. Therefore, when the term ‘dividend’ is used by the bank for that which it gives to account holders, it refers only to interest which is given on their monies that they have at the bank.

And Allah Knows best

Mufti Waseem Khan

10/02/2021

This answer was collected from DarulUloomTT.net, which is operated under the supervision of Mufti Waseem Khan from Darul Uloom Trinidad and Tobago.

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