A business account runs into overdraft,and interest is deducted from it.Sufficient funds then accumalate and interest is added to it.May the second sum of interest be used in lieu of the first?

At the outset, we wish to state that it is not permissible to take an interest bearing loan as is the case in an overdraft situation. It is not permissible to accumulate funds to generate interest.

However, the accumulated interest on funds may be used to offset interest charged from the same bank, for example, both accounts are in Standard Bank. If one account in Standard Bank and the other is at another bank, the interest earned from one cannot be used to offset interest charges at another bank.

and Allah Ta'ala Knows Best

Mufti Ebrahim Desai