RESOLUTON
No. 10 (10/2)
CONCERNING
TRANSACTIONS WITH BANKS DEALING
WITH INTEREST
AND TRANSACTIONS WITH ISLAMIC BANKS
The
Council of the Islamic Fiqh Academy, during its second session, held
in
Jeddah (Kingdom of Saudi Arabia), from 10 to 16 Rabiul Thani
1406 H (22-28
December 1985).
Having reviewed
numerous studies on modern financial transactions;
After pondering
over said studies and thoroughly discussions all aspects
thereof,
the negative impact of such transactions on the international
economic order and stability became obvious, especially in
relation to
Third world countries.
Having further
deliberated on the detrimental effects of the said effects
of
the said system, because of its deviation from directives of the Holy
Book, which clearly prohibits Riba (usury), be it total or
partial, and
commands us to repent from it, and permits us to
recover only the principal
of loans, no more and no less, whether
it is a big amount or a small one,
and warns us of a war waged by
Allah and His Prophet against usurers:
RESOLVES
First:Any
increase or interest on a debt which has matured, in return for
an
extension of the maturity date, in case the borrower is unable to pay
and increase (on interest) on the loan at the inception of its
agreement,
are both forms of usury which is prohibited under
Shari'a.
Second:The alternative, which guarantees the cash
flow and financial
support for the commercial activity in a form
acceptable to Islam, is to
trade with each other in conformity
with Shari'a principles.
Third:The Academy invites Governments
of Islamic countries to encourage the
financial institutions
which operate in accordance iwth the principles of
Islamic
Shari'a, and to enable them to operate in every Muslim country, so
that they may respond to the needs of Muslims and Muslim does not
have to
live in contradiction between the demands of his faith
and the realities of
life.
Verily, Allah is
All-Knowing. Unquote
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