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Fatwas / Sales Fatawa / What is the ruling of shares in the national bank?



What is the ruling of shares in the national bank?

ما حكم الأسهم في بنك البلاد


Praise be to Allah, and may Allah’s peace and blessings be upon the Messenger of Allah, his family and his companions.

To proceed:

In response to your question, I say :

This is a question which is asked frequently. The National Bank is from amongst emerging banks in which shari’a principles and standards should be taken into account in terms of its dealings and it’s investments. What is apparent to me after researching and enquiring about it is that it is a bank free from Islamic reservations and it is permissible to invest in it. Not only that but we encourage the brothers to invest in it because it is a way of supporting Islamic economics. This is because the bank applies shari’a standards in its dealings and tries to avoid doubtful and suspicious matters. I know its directors and its shari’a supervisory body; they are very devoted to avoiding anything that is impure or blamable.
However, some of our good brothers may have bought shares in specific companies, let’s say for one hundred thousand riyals and now they are having around five hundred thousand riyals in their accounts and it has come to their attention that the companies engage in impermissible activities due to the availability of either interest based loans given at 50% per annum or bonds and debentures. How do they deal with this issue? Do they now sell the shares right away because they have come to know of their impermissibility or should they dispose of some of the shares?
I say to them: in reality this is an obscure issue and characterizing an investment as impermissible due to the availability of some prohibited transactions is reckless. This is becauseshares are not described as prohibited except if they consist of a principal activity which is prohibited, and the investment is based on a prohibited thing. 
However, if the principal activity is permissible whether it is a service, power, telecommunications, partnerships, commodities or real estate and the like then the investment is characterized as permissible.  However if interest-based loans or bonds are later involved in it, then in that case these loans may spoil the activity if their proportion is high. However, if their proportion is low and secondary, this does not affect the original ruling of the activity. I call upon everyone to cleanse their transactions from all impurities, especially if a person is investing funds which people have entrusted them. Therefore, that person should strive to free himself and other peoples’ wealth from impurities and doubts.
However, if this happens and doubt is involved, he should purify his wealth in proportion to the doubtful issues that occur therein.
As for the person who invests while thinking that he is investing in a sound and clean venture, and then it later becomes clear that the venture is prohibited, the profits that he gained prior to that will be his, because the ruling regarding that is if a person enters into a transaction while thinking that it is permissible, then all the earnings that he gets therein will be permissible. The proof for that is Allah's statement: “Allah has pardoned what is past” [al-Maaidah: 95]. Allah did not take the people to task because of involvement of interest in the past, and he forgave them. However, if a person knows that what he is involved in is totally impermissible, then he should not be involved in such transactions.
However, if it becomes apparent that the transaction has some impurities, my view is that a person who wants to avoid doubts should avoid it based on the hadeeth of an-Nu'man ibn Basheer (may Allah be pleased with him) who narrated that the Prophet (peace be upon him) said, “Both legal and illegal things are evident but in between them there are doubtful (suspicious) things and most of the people have no knowledge about them. So whoever saves himself from these suspicious things saves his religion and his honour.” The statement “his religion” is with regards to the servant and Allah.  The statement “his honour” is with regards to what is between the person and other people. Therefore, a person has the right to avoid a sale, donation, or so on. If he wants to continue in these transactions then I cannot affirm that this is impermissible. However, if the proportion of the prohibited things is small then it should be purified accordingly.

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