Islamic finance questions
25 answers, with the positions of the International Islamic Fiqh Academy, AAOIFI, Diyanet and other institutions, and what changes in your country.
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Banking and savings
- Is bank interest haram?Interest on a savings account or fixed-term deposit: what the International Islamic Fiqh Academy, AAOIFI, Diyanet, Saudi scholars, al-Azhar and Dar al-Ifta of Egypt say, with references.
- What should I do with bank interest I have received?Interest on a savings or current account: withdraw it or leave it with the bank, who can receive it, can it pay taxes or fund a mosque? The views of Diyanet, Ibn Baz and the institutions.
- Are Islamic banks really halal?Islamic, participative and katılım banks: how they differ from a conventional bank, what the International Islamic Fiqh Academy, Diyanet and Morocco’s Shariah Committee say, and the criticisms.
- Savings accounts and passbooks: which savings are halal?Livret A, LEP, PEL, life insurance, ISAs, katılım hesabı: what pays interest, what complies, alternatives by country, and the views of the International Islamic Fiqh Academy, Diyanet and Dar al-Ifta.
Credit and payments
- Is a conventional mortgage permitted?Mortgages with interest: the views of the International Islamic Fiqh Academy, Diyanet, the European Council for Fatwa and Research (1999), Dar al-Ifta and AMJA, and Islamic home finance by country.
- Car finance, lease with option to buy and leasing: are they permitted?Buying a car on credit, on lease-to-own or through leasing: what the International Islamic Fiqh Academy and Diyanet say, credit vs instalment sale, murabaha and ijarah, and offers by country.
- Are zero-interest loans permitted?PTZ, prêt d’honneur, employer loans, 0% credit: an interest-free loan is permitted, but watch the fees, insurance and conventional loans that come with it. International Islamic Fiqh Academy rules.
- Are credit cards permitted?Credit cards, deferred debit and Islamic credit cards: the position of the International Islamic Fiqh Academy (even if you pay on time), AAOIFI and Diyanet, and solutions by country.
- Is paying in instalments permitted?Klarna, Alma, PayPal, Tabby, Tamara, taksit: when split payment is a permitted instalment sale and when it becomes credit with interest, per the International Islamic Fiqh Academy and Diyanet.
- Are student loans permitted?UK student loans, the French state-guaranteed student loan, KYK: what institutions say about interest and indexation, and interest-free alternatives by country, including Alternative Student Finance.
Insurance and pensions
- Is insurance permitted?Car, home, health and life insurance, compulsory insurance: the position of the International Islamic Fiqh Academy, Saudi scholars and Diyanet, and the takaful alternative by country.
- Is saving for retirement permitted?State pensions, PER, UK pensions, Turkish BES, 401(k): what is problematic (bonds, guaranteed funds), what Diyanet says about BES and the state contribution, and how to choose compliant funds.
Stock market and investing
- Investing in the stock market: are shares halal?Is buying shares permitted? The company’s business, “mixed” companies, AAOIFI and Islamic index thresholds, purification, PEA, Borsa İstanbul Katılım: the views and a method for checking a share.
- Are ETFs and index funds halal?Is a conventional MSCI World or S&P 500 ETF halal? How it differs from an Islamic ETF, the index methodology, purification, PEA and ISA, and a directory of compliant funds.
- Are dividends halal?Are dividends from a compliant share lawful? Why and how to purify the non-compliant part, the two calculation methods, capital gains, and a free calculator.
- Are trading and day trading permitted?Is buying and selling shares within the day halal? What the International Islamic Fiqh Academy permits and prohibits (resolution 63), how it differs from speculation, CFDs, margin and short selling.
- Short selling and buying on margin: are they permitted?Short selling, buying on margin, leverage, securities lending: why the International Islamic Fiqh Academy and Diyanet prohibit them, with their references.
- Options, futures and derivatives: are they permitted?Call and put options, futures, CFDs, binary options, warrants: the position of the International Islamic Fiqh Academy (resolution 63), AAOIFI and Diyanet, and how they differ from salam.
- Is forex trading permitted?Currency trading, leverage, swaps, swap-free “Islamic” accounts: what the International Islamic Fiqh Academy (resolutions 63 and 102), AAOIFI and Diyanet allow, and why CFD forex stays excluded.
Gold and cryptocurrencies
- Gold: how to buy it and invest in it lawfullyPhysical and online gold, gold accounts and ETFs, buying on credit or in instalments, trading in jewellery: the hand-to-hand rule per the International Islamic Fiqh Academy, AAOIFI and Diyanet.
- Are cryptocurrencies permitted?Bitcoin, Ethereum, stablecoins: the positions of the International Islamic Fiqh Academy (2019), Diyanet (2017), Dar al-Ifta (2018) and the Indonesian Ulema Council (2021), on gharar and speculation.
- Is staking permitted?Proof-of-stake staking, staking on a platform, “earn” products and crypto lending: what resembles payment for a service, what is an interest-bearing loan, and what the institutions say.
Other questions
- Is property crowdfunding permitted?Property crowdfunding through bonds, loans to developers or shares in a property company: how to tell an interest-bearing loan from a genuine stake, per the International Islamic Fiqh Academy.
- Is a rotating savings circle among friends or colleagues permitted?Daret, gün, altın günü, jam‘iyya, tontine: when a rotating savings circle is a permitted mutual loan, and what makes it forbidden (surplus, bidding, fees, a loan repaid by value).
- Are prize bonds and lotteries permitted?British Premium Bonds, prize savings accounts, raffles, competitions, national lotteries: what the International Islamic Fiqh Academy and Diyanet say, and what to do with a prize already won.