Chit Funds

Answered according to Hanafi Fiqh by

As’salamu alaykum wa rehmatullahi wa barkatuhu.

There is a chit scheme.In this lets say about 10people and 1 agent will be involved..these 10 people will pay 10,000 each for 10 months(that means 100,000 (10,000*10people’s money) will be gathered each month).The agent will take 4000 as commission each month for maintaining this process.
Money(96,000) will be given to the people each month who needs it the most but the person who takes the money should pay 1,000 extra for the remaining months.
say if x takes the money(96,000) in the 1st month then he will pay extra 1000 for the remaining 9 months.
2nd person who takes money in 2nd month will get 96,000+1,000(1st persons extra money) and pays 1000 from 3rd month,
3rd person will get (96,000+1,000(1st persons) +1,000(2nd person) and so on..So like that the last person will get (96,000+(1,000*9))

Note that the last person will not pay anything extra but gets 9000 extra apart from 96000 which he deserves.

My question is, Is this kind of transactions appropriate.If it is permissible then why and if it is not permissible then why.Please explain with reference.

Hope that I am clear..waiting for a reply.
Jazak allah khair


Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,

The scheme outlined in your query is not permissible due to two factors:

  • Interest
  • Gambling

The interest aspect comes to the fore when a person withdraws his money towards the end, or even last, he receives his initial capital plus the 1000 ‘penalty’  which the other members had to pay in the previous months.  The only reason he is getting all this additional funds is because his money was in the fund for a longer period. Money in exchange of money is interest, which is clearly prohibited in Shariah.

The gambling aspect is due to the fact that the person who really gains the most is the person who is lucky enough to remain till the end of the ten months. Those who cash up in the first few months actually lose out. In other chit funds, members have to bid, and the one who is willing to take the biggest lose can cash out first.

By entering the chit scheme, each person hopes and wishes to last till the end and derive the most. But, due to circumstances, a member will be forced to leave early, and take the loss. This too is not permissible in Shariah.

And Allaah Ta’aala knows best


Ismail Moosa (Mufti)


الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ۚ فَمَن جَاءَهُ مَوْعِظَةٌ مِّن رَّبِّهِ فَانتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ ۖ وَمَنْ عَادَ فَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ (275) يَمْحَقُ اللَّهُ الرِّبَا وَيُرْبِي الصَّدَقَاتِ ۗ وَاللَّهُ لَا يُحِبُّ كُلَّ كَفَّارٍ أَثِيمٍ (276) إِنَّ الَّذِينَ آمَنُوا وَعَمِلُوا الصَّالِحَاتِ وَأَقَامُوا الصَّلَاةَ وَآتَوُا الزَّكَاةَ لَهُمْ أَجْرُهُمْ عِندَ رَبِّهِمْ وَلَا خَوْفٌ عَلَيْهِمْ وَلَا هُمْ يَحْزَنُونَ (277) يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِينَ (278) فَإِن لَّمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِّنَ اللَّهِ وَرَسُولِهِ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ (279)

يَا أَيُّهَا الَّذِينَ آمَنُوا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالْأَنصَابُ وَالْأَزْلَامُ رِجْسٌ مِّنْ عَمَلِ الشَّيْطَانِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ (90)

عن أبى هريرة قال قال النبى -صلى الله عليه وسلم- ح وحدثنا وهب بن بقية أخبرنا خالد عن داود – يعنى ابن أبى هند – وهذا لفظه عن سعيد بن أبى خيرة عن الحسن عن أبى هريرة أن رسول الله -صلى الله عليه وسلم- قال « ليأتين على الناس زمان لا يبقى أحد إلا أكل الربا فإن لم يأكله أصابه من بخاره ». قال ابن عيسى « أصابه من غباره ». (أخرجه أبو داود في سننه (3/ 248)

عن جابر قال  لعن رسول الله صلى الله عليه وسلم آكل الربا وموكله وكاتبه وشاهديه وقال هم سواء (أخرجه مسلم في صحيحه – (3/ 1219)

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