A social fund for the personnel association of an organization was established where the association would provide a member of the plenary, wishing to purchase household items, with the maximum of (500 JDs). The purchases are to be repaid by installments over ten months and with profit percentage of (10%). Once the member produces the purchase invoice, he is given the money. Is this transaction usurious? Is it permissible to delegate the member to make the purchase on behalf of the fund?
All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon Prophet Mohammad and upon all his family and companions.
The Iftaa` committee has reviewed the internal system of the personnel`s social fund and found that it is a cooperative fund that aims to strengthen the social ties amongst the organization`s personnel, in addition to developing the cultural and social activities of the organization itself.
These aims are legitimate and recommended and there is no sin in realizing them through this personnel`s fund, which rests on the contributions of the willing employees. The deductions are voluntary and may not be taken back in case an employee decided to withdraw, as stated in Article (14). They are deposited at Islamic banks and all participants know their disbursement channels.
However, it is obligatory to add the word (donation), or similar words, in the above system to make things clearer for the participants. It is also necessary to stipulate giving the money to charity in case the fund was liquidated.
As for the amendment that was added recently. It states the following: "It was agreed to allocate half the amount for purchasing items needed by the participants with a maximum of (500JDs) and with (10%) as profit percentage to be repaid over ten months at maximum." It can`t be added in such undisciplined manner since Islamic Murabaha is governed by a special system that determines the cooperative relationship of the fund with the profits of these transactions and the personnel themselves.
The method of Murabaha stated in the above question involves some prohibitions. For example, "Delegating the member himself to make the purchase on behalf of the fund." This was prohibited in Resolution No.(176) of the Jordan Iftaa` council. And Allah the Almighty knows best.