The ruling on the Interest that the Banks pay

Question :

Some banks give profit earning to the sums of money that are placed with them by people who make deposits and we do not know the ruling on these interest earnings. Are they Riba or are they permissible earnings that are permis- sible for the Muslim to take? Are there any banks in the Arab world that deal with the people according to the Islamic law?

Answer:

Firstly, the profits that the bank pays to those who make deposits, adding them to the sums of money that the people deposit in it, are considered Riba. It is not permissible for the person to benefit from these profits. He must repent to Allâh for depositing money into these Riba banks. He must also withdraw the money that he deposited and its Riba profit. Then, he keeps the capital sum and he spends whatever is more than that in the ways of righteousness, such as on the poor, the needy, helping to make the public utilities better and so forth.

Secondly, he must search for a place that does not deal in Riba, even if it is a shop, and the money should be put in it as a method of doing shared business. This should be a known designated portion of the profit, like a third for example. He may also put the money in the place as a means of securing it without any profit. May Allâh send blessings and peace upon our Prophet Muhammad, his family and his Companions.

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