Use interest money to pay bribes, bank charges, taxes : investing interest money

Fatawa Question

Dear Prof Kahf, Salaam Alaykum We hope your family is fine. We kindly need your opinion on some issues : Our state governments have accounts that generate interest every month. They want to invest the interest proceeds with our capital in form of temporary endowment for feeding people during Ramadan and other societal reorientation projects. 1. Is it permissible to take interest proceeds from government to invest for societal benefits ? Does that translate to trading with Riba ? It is permissible to take interest money and invest it in permissible uses to the benefit of the depositor of this money. This does not amount to trading with Riba. The prohibition is focused on lending against increment. For a Muslim, if it happens that interest money is generated to her / himself this money should be given away to charity. 2. Is it permissible for us to ask government to give their interest proceeds for investment ? My preference is that interest money be distributed to needy causes, but if you know that it is not going to be distributed immediately either because of logistic reasons or because of desire and processes of the holder of this money (the government), then it is okay to ask for investing it by / in us. It is more so if you know that alternative use is to keep it in conventional banks earning more interest, then by asking for its investment in our o = company you will be reducing the evil of Riba. 3. Is it permissible for our company to earn a fee on the management of these endowments that its principal originated from interest generated from other sources ? Yes, because these fees are against your services provided to manage this money. 4. What investment tenure is possible for such an endowment as it originates from an Interest income? Can it be invested and grown ? Here again my preference is to distribute this money for needy causes (these don’t have to be only poor and needy but include the general causes of the country / people). But whenever there are more obvious benefits in holding their distribution for a period of time or hindrances in distributing quickly, investing them in Shari’ah compliant ways is the best alternative for as long as it is better to invest or until obstacles removed. We pray for god’s guidance to you and your family. Many thanks to you, your family and other brothers and sisters in the company and their families. Wassalam. Funke

Fatwa

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Publication Date

2009-02-11

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Investments
• Money
• Usury

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-730452

• APA
• MLA
• AMA