Islamic banks may distribute pre-determined profit subject to adjustment

Fatawa Question

I put my savings in an Islamic bank in Egypt (al Masraf al Islami al Dawli-intenational Islamic bank for investment and development). When I put my savings they made me sign on the rules that guide their investment which say that I will share with them their gain and loss. They say that they will pre-specify an average interest rate and at the end of each term they will update it according to whether they made more or less money. The problem is that i feel this is a fake since they always end up with the same average rate that they pre-specified every time. This has been the case for the past 10 years. I asked about other Islamic banks and they all do the same thing. Is this Riba or not ? My other concern is that I heard that these Islamic banks give loans to investors and apply compound interest (under implicit names) on them which is definitely Riba. Is that true ? If so, what should one do with his / her money ? If i put it in checking account (whether Islamic or non-Islamic banks) then I will get no income back but they will still be investing it in Riba if they actually do compound interest. What should one do with his / her savings ?

Fatwa

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Publication Date

2003-01-16

Main Subjects

Economics & Business Administration
Financial and Accounting Sciences
Religion
Islamic Studies

Topics

• Islamic jurisprudence
• Islamic economics
• Profits
• Investments
• Egypt
• Bank deposits
• Transactions
• Islamic Banks

Data Type

Fatawa

Language

English

Record ID

BIM-724704

• APA
• MLA
• AMA