Friday, August 19, 2022 - 21 Muharram 1444

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Benefitting from interest

I deposited a sum of money in the bank some years back and received interest on it. Is it permissible to benefit from the interest or it is prohibited?

Answer

 

There is a disagreement in our modern age on how scholars conceive the nature of interest generated from banks. Bank deposits are considered a new form of financial contracts; they are not loans that generate prohibited interest and have nothing to do with usury.
According to the opinion approved and implemented by verifiers, it is permissible to make new forms of contracts if they are free of risk and harm. This is the opinion implemented by the Egyptian Banking Law No. 88/2003 and its executive regulations issued in 2004.
Since the decree of the ruler lifts disagreements around banking issues, the interest is lawful since it is not generated from prohibited loans. Rather, it is profit generated from these contracts which achieve benefit for those involved. Based on this, interest generated from bank deposits are permissible.
And God Almighty knows best.