Banking, accounting and related careers

Opening Bank Accounts

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Shaykh (Mufti) Ebrahim Desai (HA)

Question: Is it correct to keep a saving or money market account (both account accrue interests) even if we dispose off interest to needy without any intension of reward? Please explain your answer? [Owais]

Answer: In the Name of Allah, Most Compassionate, Most Merciful,

As a general rule, no Muslim by his free choice should deposit his money into an interest bearing account. (Contemporary Fataawa pg.160; Mufti Taqi Usmani)

Depositing money in a commercial bank results in two evils, the taking of interest and aiding in haram on account of the bank using your funds to grant haram loans. (Ahsanul Fataawa vol.7 pg.14; Fataawa Raheemiyyah vol.2 pg.192). Thus, the ideal situation would be to protect the money in a safe place or use a safety deposit box. If out of necessity, one has to open up a bank account, then one should open an interest-free account. In case even that is not possible, one should dispose of the interest money by giving it to the needy without the intention of reward. (Fataawa Mahmoodiyah vol.4 pg.200)

Some banks offer accounts which do not reap interest, while at the same time no bank charges are levied on them. This is an alternative which could be adopted in the event of the need to open up a bank account.

And Allah Knows Best

[Mufti] Ebrahim Desai

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Bank Employment & Certain Specific Jobs

Shaykh (Mufti) Muhammad Ibn Adam (HA)

Question: Is it permissible for a person to work in a software company which only develops the software for the Banking sector? 

Answer: In the Name of Allah, Most Compassionate, Most Merciful,

Ts explained in an earlier answer, the principle concerning employment in a bank (or any other financial institution) is that any work or job that entails being directly involved in interest-based transactions will be unlawful and sinful with the wages on such work being Haram, and any work that does not entail being involved in usurious transactions will be lawful.

In a Hadith, the Messenger of Allah (Allah bless him & give him peace) invoked curse (la'na) on the receiver of interest, the payer of interest, the scribe and the two witnesses, and he said: "They are the same" (i.e. in sin). (Sahih Muslim)

Keeping the above principle in mind, let us now look at certain specific posts and jobs at a bank:

1Working in a bank as a call attendant and answering phone calls would be permitted as long as the job entails discussing general matters regarding one's account and giving information to the customer in a general manner. However, if the job also includes giving advice on interest-based transactions or helping the customer in being involved in Riba, then this would be considered assisting in sin, hence not permitted.

2Providing computer software or making computer programmes for the bank would also be permitted. However, designing programmes that are exclusively used for usurious transactions will not be permitted.

3Working as a manager in a bank is not permitted.

4Working as a cashier at a bank is also not permitted.

5Working as a guard, a cook or a cleaner in a bank will be permitted.

Thus, in conclusion, if a job has a direct connection and link to the writing, assisting, recording and advising of interest-based transactions, then it will not be permitted to take up that job. However, if a job at a bank has no connection with interest-based transactions, it will be permitted, but still better to avoid.

I hope your query has been answered with the above explanation. 

And Allah Knows Best

[Mufti] Muhammad ibn Adam

Darul Iftaa

Leicester , UK

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Working for a Company that Sells Products to Banks and Casinos

Shaykh (Mufti) Muhammad Ibn Adam (HA)

Question: I am interviewing with a company that manufactures automated coin and money sorting & counting devices. Among the company's customers are banks and casinos. Is it permissible for me to work for this company, knowing that their revenues are based on the profits of the above mentioned businesses? The specific job I am being considered for is in Software Engineering? 

Answer: In the Name of Allah, Most Compassionate, Most Merciful,

It would be permitted to work for a company that manufactures automated coin-sorting and coin-counting devices, even if the company's customers include banks and casinos amongst others.

Companies that manufacture coin and money counting and sorting devices usually have many customers. Their customers are generally those who take in large quantities of coins and loose cash, such as casinos, theatres, arcades, banks, financial institutions, grocers, markets and other shops. As such, their revenue is based on dealing with all kinds of businesses. Given this, all their proceeds cannot be deemed unlawful.

Moreover, contemporary scholars state that transacting with a bank is permitted. They explain that not all the money stored in a bank is interest and unlawful money, rather it comprises of money deposited by the depositors in various accounts, initial capital put in by the owners of the bank and also money acquired via interest-based transactions. In fact, interest money is usually less in comparison to the other two types of money. Thus, the money stored in a bank is a mixture of Halal and Haram, with the majority of it being Halal money.

As such, if one sells an item to a bank, and the bank pays from this mixture of wealth, then it is permitted for one to transact with the bank and take this money. Yes, if a bank was to pay purely from the portion of interest it has in its possession, which is rare, then it would not be permitted for one to deal with the bank.

Given this, the revenue generated by a company that sells products to banks is Halal, hence working for such a company would also be permitted. Yes, if the company's sole customers are casinos, clubs, pubs and other Haram industries, or the majority of its revenue is generated from selling products to such businesses, then it would not be permitted to work for such a company, given that one's salary will be paid from profits made through dealings with them. (See: al-Fatawa al-Hindiyya 5/343)

And Allah Knows Best

[Mufti] Muhammad ibn Adam

Darul Iftaa

Leicester , UK

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Working as an Accountant

Shaykh (Mufti) Taqi Usmani (HA)

Shaykh (Mufti) Ebrahim Desai (HA)

Question: I read in a hadith that the person who writes interest is also cursed. But I am not to clear as to what the hadith implys to. Does it imply to the manager of the bank who writes and authorizes the loan and interest rate or even accountants who records it. If it also implys to accounting than would this profession be unlawful. Please provide details. Jazakullah? 

Answer: In the Name of Allah, Most Compassionate, Most Merciful,

The Qurãn and Hadith are explicit with regard to the prohibition of interest.

Rasulullah Sallallahu Alayhi Wasallam is reported to have said, "May the curse of Allah Taãla be upon the one who consumes interest, the one who pays interest, those who witness the interest transactions and those who record it.?(Mishkãt)"

Thus the warning in this Hadith is severe. Yet transactions in interest have become extremely widespread. However, it is tremendously pleasing to note that many people are concerned about their Imaan and wish to save themselves from any involvement in interest. Thus a group of accountants formulated some questions on interest related matters and submitted them to Mufti Taqi Usmani Saheb of Pakistan in order to determine the definite Islamic position on these matters. Selected questions have been published for the benefit of other people involved in similar situations. In addition, we like to point out that the Jamiat consults Mufti Saheb on a number of Juristic matters.

Question: Respected Mufti Saheb, Ássalaamu Álaykum Wa Rahmatullaahi Wa Barakaatuhu,

As accountants we are faced with a moral dilemma with regard to certain aspects of our work. Thus we write to you seeking guidance in this matter.

Please advise us with regard to the following:

According to the well known Hadith, Rasulullah (Sallallaahu Álayhi Wasallam) has invoked the curse of Allah Taãla upon four categories of people due to their association with interest. Among them is the one who has written the interest transaction. Concerning the above, what is the position of an accountant who prepares the financial statements of clients? In the course of this preparation, he has to record amongst other transactions, the interest transactions of his clients in their books. It should be noted that he is generally never present at the time of the transaction (except rarely which also can be avoided).

Does the accountant in the course of recording such interest in the financial statements of clients also fall within the ambit of this Hadith?

The accountant in reality merely prepares an analysis of the year's transactions and reports on the profit/loss and the assets and liabilities of the business i.e. the financial position of the business for/at a particular period. Hereunder are some of the different types of transactions which accountants routinely record.

Please advise us with regard to each one of them as to whether they fall within the ambit of the said Hadith.

1  An accountant is working for a company. The company charges its debtors interest on their overdue accounts. The accountant is instructed by the directors, as part of his functions, to make appropriate entries in the records of the company in terms of which interest is charged on certain overdue accounts. The question arises whether it is permissible in Shariáh for such an accountant to:- Become involved in this manner in the charging, recording and execution of interest on overdue accounts. Remain employed with such an employer who charges interest on overdue accounts. Receive a salary which is considered as Halaal in Shariáh from such a company, a small portion of whose income is represented by interest collected from debtors.

2  The accountant working for a company writes the cheques of the company. At times the amount recorded on the cheque includes an amount of interest. What is the position of the person who issues out such cheques? Also what is the position of the signatories to such cheques? It must be noted that the accountant himself was not an original party to the transaction of loan which gave rise to the interest obligation. In certain circumstances, even the signatory was not an original party to the transaction.

3 A motor vehicle salesman sells a vehicle to a customer. The customer finances the vehicle through the bank upon which he pays interest. The salesman in most instances has to assist the customer in completing the application for finance to the bank by filling in the details on behalf of the customer. Some application forms also have a place for the signature of the person who assisted the customer in completing his application. Will this assistance to the customer be prohibited? Does the salesman also become a witness to this interest transaction merely by assisting to complete the application? It should be noted that the financing transaction is distinct from the sale transaction and it is solely between the customer and the bank.

4 A client comes to the accountant seeking advice of the best option with regard to undertaking a certain business venture or the acquisition/purchase of an asset. Among the various options which the accountant advises him on is the position of financing via a bank whereupon he will be charged interest. What is the position of advising with regard to such an option? If the client is a non-Muslim, will it make any difference?

5 A person working for a non-Muslim company invests surplus funds, on instruction, in interest bearing securities. What is his position in relation to the said Hadith?

6  If the client?s business activities are mostly of a nature which the Shariáh has declared forbidden, such as he sells liquor, or trades in meat not slaughtered according to Islamic rites, can the Muslim accountant undertake to do his books?

7 A Muslim accountant works for a non-Muslim company which deals generally in Halaal merchandise, but also sells some Haraam items, such as liquor, etc. Is he committing any Sharée violation in recording the transactions pertaining to the Haraam items?

8  What advice can you give to accountants in general pertaining to their profession?

Submitted by: A group of Sixteen Accountants 

Answer: Respected Brothers Ássalaamu Álaykum Wa Rahmatullaahi Wa Barakaatuhu

It is true that according to a well known Hadith those who invoke the curse of Allah with regard to a transaction of Riba (interest or usury) include a person "who has written the interest" However, this Hadith refers to the scribe of the transaction i.e. a person who has written an agreement or prepared the document to evidence the transaction.

It does not include a person who was not involved in the transaction itself in any way, but while preparing the accounts of a person, has come across reference to the Riba transaction and has recorded it as an event that has already happened without his involvement. This is how the scholars have interpreted the Hadith. Al-Ubbi, the famous commentator of Sahih Muslim has explained the Hadith in the following manner: By the word, "writer of Riba" the Hadith intends the scribe of the document evidencing the transaction of Riba, and by the word "witness" it means a person who attended the occasion to become a formal witness in support of the transaction the Holy Prophet (Sallallaahu Álayhi Wasallam) has held them all as equal in sin because the transaction took place only with their joint efforts. It is evident from these references that it is the writing of the document of Riba which invokes the curse of Allah and not its subsequent recording in a statement of the facts that already happened.

Therefore, the case of an Accountant of a firm or a company is different from the person who is directly responsible for the operation of interests.

1 So far as the Accountant is not involved in charging interest, claiming it from the debtor or pursuing him for that matter, merely making entries in the books of account will not make him liable to fall within the ambit of prohibition stipulated in the Hadith. Unless the major part (at least 51%) of the company is Haraam it is not prohibited to draw salary for permissible services rendered to that company.

2 If the cheque is intended to be written or issued exclusively for the payment of interest with a clear statement that this should settle the amount of interest due on the issuer of the cheque, it is not permissible for any person to write or issue such a cheque. However, if the cheque is issued for the settlement of different liabilities of which interest is also a part then the issuance or writing of such a cheque cannot be termed as absolutely prohibited. This applies to both issuer and the signatories of the cheque.

3 Of course, any assistance provided to the customer for obtaining an interest bearing loan, including the filling of the application form for the loan, is not permissible according to Shariáh and it does fall within the scope of the warning of the Hadith.

4 A Muslim cannot advise any one to opt for a financing option based on interest. The mere fact that the rental in a lease contract has been based on the market rate of interest does not render the transaction unlawful. However, there are certain other conditions which must be fulfilled for a valid lease transaction that cannot be summarised in this letter.

5As mentioned earlier, direct involvement of a Muslim in a transaction of interest is prohibited and comes under the purview of the above Hadith. Therefore, it is not permissible for an employee of a non-Muslim to invest his surplus funds, on his instruction, in interest-bearing securities, because in this case the employee works as an agent for the employer which is a direct involvement in the transaction of Riba.

6 If most of the activities of a business are Haraam, a Muslim should not take up the work for that business.

7 The answer to this question is analogous to question 1 i.e. so far as a Muslim is not involved in a prohibited transaction directly, merely recording that transaction in the books of account is not Haraam. However, a Muslim should avoid this also as far as possible.

8 My advice is to abide by Shariáh in every walk of life.

Mufti Taqi Usmani Saheb