Answered by Shaykh Yūsuf Badāt
What is the situation of islamic banking institutes providing housing loans on Sharī’ah base? I have heard some scholars call it a “back door ribā” as they claim that a banking institute cannot survive without a system based on interest. Please advise!
بِسْمِ اللَّـهِ الرَّحْمَـٰنِ الرَّحِيمِ
May Allāh Almighty bless you tremendously for your concern on financial matters.
There are numerous islamic financial institutions that are based on Islamically acceptable principles such as Murabaḥah (profit based sales) and Mudhārabah (profit sharing partnership) etc. Many are also supervised by third party scholarly committees who thoroughly review and approve guidelines, contracts and service stipulations. The institutions also follow the law of the land. That being said, one cannot make a blanket statement vilifying every islamic financial institution. It would be helpful if you could be kind enough to provide names of some of the scholars or their written statements regarding what you have heard from them.
It is also noteworthy to mention that there are bad apples in every industry or sector of business and trade. Yes, there are various banking institutions that operate on the same principles of conventional ribā based policies. They merely change the name ‘interest’ into ‘profit’. Services and products of such institutions would certainly be regarded as islamically unacceptable.
“Those who devour usury will not stand except as stands one whom the Satan by his touch has driven to madness. That is because they say, “trade is like usury”, but Allāh has permitted trade and has forbidden usury. Allāh will deprive usury of all blessing, and will give increase for deeds of charity, for he does not like any ungrateful sinner” (Qurʿān 2: 275 -276)
My advice would be to opt for an islamic financial institution that is reliable, established, not necessarily to make money, rather to serve the needs of the community. Such an institution should be monitored by well known sincere Islamic scholars and professional business experts.
May Allāh Almighty make your task easy and bless your transactions with purity and abundance.
And Allāh Knows Best