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Islamic banking profit

Q:

Asalaam Alykum,
I have a question about Islamic banking profit. My  Question is that if some terms  about profit are agreed  with the bank on monthly basis so is  it permissible in Islam to take such profit?

Kindest Regards,

A:

Wa Alaykumussalam

Thank you for your query.

According to Ayatullah al-Udhma Sayyid Ali Sistany:

Question: If I know that the bank will give me interest even without stipulating the conditions, is it permissible for me to deposit in a savings account that takes the form of a term-deposit?

Answer: Yes, it is permissible, as long as you do not stipulate the conditions of interest.

Question: Is it permissible to deposit or borrow money from Muslim banks whereby the interest is either received or paid out?

Answer: It is permissible to deposit money in a bank without prior condition for interest and it is as well permissible to take interest, if the bank in which money is deposited belongs to Muslims. If it belongs to government, it is permissible to take interest provided that half of the interest is given away to poor people (Momineen of them).

https://www.sistani.org/english/qa/01220/

If you have paid Khums on the actual amount which you deposited in the bank(suppose $1000), then there would be no khums on this particular amount if it remains in the bank till your next Khums year date. But the profit which comes from the actual amount and remains in your account for more than the year then Khums will be applicable to that profit amount only.

Let’s say you deposited $1000 on which you have already paid khums on, and you got $200 as a profit after one year. In this case you will have to pay khums only on this $200 that is one fifth of this amount which will be $40.

To read more rules regarding Khums: https://www.sistani.org/english/book/48/2280/

Wassalam,

Syed Haider