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Discounting Bills of Exchange

Answered as per Hanafi Fiqh by Mahmoodiyah


As per M. Taqi Usmani “If the bank has been made an agent to collect the amount of a Bill of Exchange on behalf of its client it is permissible for the bank to charge a fee for this service. The fee may be determined by the parties on whatever basis they agree upon. However, it should not be tied up with the period of the maturity of the bill. With this condition this transaction will not, hopefully, be instrumental to charge interest”. My question is whether “can a bank charge a fee equivalent to the amount of Interest or can a bank benchmark conventional benchmark rate as a FEE?




In this case the bank is not limited to any one option for fixing its fee i.e.; equivalent to the amount of interest or conventional benchmark rate.

And Allah Ta’ala knows best

Mufti Muhammad Ashraf

Darul Iftaa

Jameah Mahmoodiyah



21 February 2007

02 Safar 1428

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