My colleague purchased furniture from an establishment via Islamic Murabaha. He took the invoice from that establishment and sent it to the Arab Islamic Bank. The contract was signed by both parties with (6.5%) as Murabaha. Then, the bank issued a check in the name of the establishment. What is the ruling of Sharia on purchasing furniture through the Arab Islamic Bank using this method?
All perfect praise be to Allah the Lord of the Worlds. May Allah`s peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
In order for our transactions with Islamic banks to be valid from an Islamic perspective, two basic conditions must be met:
First: The written contract is valid by virtue of meeting Islamic pillars and conditions and having no prohibited things.
Second: The employee in charge must abide by the Islamic application of the contract.
Regarding Murabah contracts concluded with the Arab Islamic Bank and the Orphans Fund Development Foundation, the General Iftaa` Department has examined these contracts and found that they meet the Islamic pillars and are free of prohibited things and errors. Therefore, many fatwas were issued stating that these contracts are valid and lawful to deal with.
However, the second condition-employee must abide by the Islamic application of the contract-must be met in every transaction at a time. Thus, the bank must purchase the commodity from the seller and take possession of it, then resell it to the purchase orderer through making him/her sign the purchase contract.
If the employee didn`t apply these procedures and didn`t purchase the commodity from the seller. Rather, he just handed the check to the purchase orderer, then this transaction is forbidden and that employee is sinful in the sight of Allah the Almighty. And Allah the Almighty knows best.