Borrowing from commercial banks

Aug 15, 2021 | Business & Trade


Assalamu’alikum wa’rehmatullah wa’barakatuhu

Auntie wanted to ask something about banking; few days back we bought some electronic goods on installment through my uncle working in a commercial bank, whatever amount or good received, legally is on his name. My uncle said to me is that it’s like installment process and whatever we are paying in extra is fixed profit not intrest and because of this we bought those stuffs and are now paying him the installments.

But now as I found out that getting anything from commercial bank is prohibited, wether it’s on installation on fixed profit, mortgage or anything.

My question is if someone has bought anything from bank and realized that it’s inappropriate and wanted to repent, what should one do in a situation like we’re in right now, we’re we have used the amount and now paying the installation, how can we get out of this situation.


In the name of Allah, the Inspirer of truth

Some commercial/retail banks in Pakistan offer Shari’a compliant services to customers as an alternative to interest based banking. You mentioned that you have found out that commercial banking is prohibited. We cannot confirm this information without details of your transaction with the commercial bank you used.

There are two models of purchasing consumer goods from banks on instalments:

1. Islamic banking model

Here, the customer purchases the item from the bank. Bank may take profits from the supplier and the customer. Since the bank will not disclose the cost price at which they purchased from the supplier, this transaction will be considered Musawama and not Murabaha.

2. Conventional banking model

In this, the customer is purchasing directly from the supplier on credit (often through the bank’s catalogue), however the bank acts as a facilitator and provides a loan. The cost price is known but a markup is added to the value. Although the markup is known, however it is not fixed and so this will not fall under the permissible mode of transaction known as Murabaha. The later you pay, the more interest you incur. Since there is uncertainty what the final cost will be to the customer, this mode of banking is impermissible.

Please note that both models of banking may outwardly appear very similar as in the second method, the customer may not always know they are purchasing from the supplier and not the bank. It’s important to note that in this method, the fact that the final price is not fixed brings to focus its issues.

We urge you to confirm with your bank the details of your transaction to confirm whether it is Shari’a compliant or not. If you find that the transaction is based on the conventional banking model:

1. Is there a 0% markup period where you can pay off the instalments without interest? If so, try to pay it off as soon as you can within this timeframe.

2. Is it possible to switch to another Shari’a compliant bank providing the same service to pay off your debt?

3. If you have no way out of this contract, you have no choice but to pay off the instalments. Paying interest is sinful – you should aim to be rid of this unlawful contract as soon as you can. You must repent and seek forgiveness from Allah for this wrongdoing.

And Allah knows best.

الدر المختار وحاشية ابن عابدين (رد المحتار) (4/ 501) وَإِنْ اُعْتُبِرَ مِنْ حَيْثُ تَعَلُّقُهُ بِالثَّمَنِ أَوْ بِمِقْدَارِهِ فَهُوَ أَرْبَعَةٌ أَيْضًا؛ لِأَنَّهُ إنْ كَانَ بِمِثْلِ الثَّمَنِ الْأَوَّلِ مَعَ زِيَادَةٍ فَمُرَابَحَةٌ، أَوْ بِدُونِ زِيَادَةٍ فَتَوْلِيَةٌ، أَوْ أُنْقِصَ مِنْ الثَّمَنِ فَوَضِيعَةٌ، أَوْ بِدُونِ زِيَادَةٍ وَلَا نَقْصٍ فَمُسَاوَمَةٌ،

الدر المختار وحاشية ابن عابدين (رد المحتار) (5/ 132) (قَوْلُهُ: وَلَمْ يَذْكُرْ الْمُسَاوَمَةَ) وَهِيَ الْبَيْعُ بِأَيِّ ثَمَنٍ كَانَ مِنْ غَيْرِ نَظَرٍ إلَى الثَّمَنِ الْأَوَّلِ وَهِيَ الْمُعْتَادَةُ

تبيين الحقائق شرح كنز الدقائق وحاشية الشلبي (4/ 78) لأن الأجل ليس بمال متقوم فلا يقابله شيء من الثمن،

البناية شرح الهداية (10/ 26) (وذلك اعتياض عن الأجل وهو حرام) ش: ألا ترى أن ربا النساء حرام لشبهة مبادلة المال بالأجل، فلأن تحرم حقيقة أولى، وبه قالت الأئمة الثلاثة وأكثر العلماء. م:

الدر المختار وحاشية ابن عابدين (رد المحتار) (5/ 166) (قَوْلُهُ كُلُّ قَرْضٍ جَرَّ نَفْعًا حَرَامٌ) أَيْ إذَا كَانَ مَشْرُوطًا

Contemporary Fatawa, Mufti Taqi Uthmani pp.133-40

Easy Installment Plan – HBL Bank in Pakistan

MCB Bank Pakistan | Personal Product | Marketing Alliances Classic

Consumer Ease | Durable Goods | Monthly instalment | Meezan Bank

Answered by:
Bint Saeed

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel