💰 Family finances · #13
What is the ruling on interest-bearing (riba) loans, and what about bank financing today?
Riba is forbidden by clear texts. Al-Baqarah 2:275 says Allah has made trade lawful and forbidden riba, and states the consequence for those who return to it after knowing.
What we cannot determine here is the classification of particular products. Whether a given bank financing today falls outside riba depends on the structure of its contract. That determination is a matter for the Shariah Advisory Council of Bank Negara Malaysia, the authority that ascertains Islamic law for Islamic financial business (Central Bank of Malaysia Act 2009 s.51), not for this site. The Council's ruling on a reference binds Islamic financial institutions (s.57) and prevails over a ruling of the institution's own Shariah committee (s.58). We do not name any product, rate or institution. If a second financing is to be taken for a second marriage, read The finances of two households first — new debt is not proof of means.
What we cannot determine here is the classification of particular products. Whether a given bank financing today falls outside riba depends on the structure of its contract. That determination is a matter for the Shariah Advisory Council of Bank Negara Malaysia, the authority that ascertains Islamic law for Islamic financial business (Central Bank of Malaysia Act 2009 s.51), not for this site. The Council's ruling on a reference binds Islamic financial institutions (s.57) and prevails over a ruling of the institution's own Shariah committee (s.58). We do not name any product, rate or institution. If a second financing is to be taken for a second marriage, read The finances of two households first — new debt is not proof of means.
Sources
Surah al-Baqarah 2:275Central Bank of Malaysia Act 2009 [Act 701] s.51, s.57, s.58 — Shariah Advisory Council