Please advise if it is acceptable to approach a conventional bank to effect an asset based transaction where the interest rate and the period of re-payment is fixed?
Question
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Please advise if it is acceptable to approach a conventional bank to effect an asset based transaction where the interest rate and the period of re-payment is fixed?
Answer
If the conventional bank offers a loan on interest, it is not permissible even if the interest rate is fixed. The Qur'aan expressly prohibits every form of interest.
However, if the bank proposes to purchase the asset and resell it to the client on a fixed profit, then it will be permissible. The addition on the purchase amount will be a profit on sales and not interest.
and Allah Ta'ala Knows Best
Mufti Ebrahim Desai
- Answered by
- Mufti Ebrahim Desai
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