Is bank commodity murabaha (tawarruq) halal?
Some Islamic banks give cash by selling you a commodity on credit and then selling it on your behalf for cash. When the bank arranges both sales and the metal is only a paper step, the OIC Fiqh Academy rules it out as a trick for interest, and Mufti Taqi Usmani rejects the bank being your pre-arranged selling agent. Buying goods on credit and selling them yourself to an unrelated buyer is a real trade, allowed but not ideal.
The guidance
An Islamic bank gives me cash by buying and selling a commodity. How does it work?
- The bank sells me metal on credit, then sells it on for me for cashHaram · Riba in disguise · OIC 179In this organised form the commodity is a paper step: the bank arranges both sales and you end up with cash now and a bigger debt later. The OIC Fiqh Academy rules it out as a trick for interest, and Mufti Taqi Usmani rejects the bank being your pre-arranged selling agent.Other views: AAOIFI Standard 30 allows bank tawarruq only when the bank does not sell for you and the goods never go back to the seller. Many banks do not meet that.
- I buy real goods on credit, take them, and sell them myself elsewhereHalal · Trade · TawarruqBuying on credit and selling for cash to an unrelated buyer is a real trade, and the classical schools allow it. You must truly own and receive the goods and sell them yourself. Scholars still prefer an interest-free loan and advise this only in real need.
- The bank sells me goods on credit, then buys them back itself for lessHaram · Riba · ’InaSelling on credit and buying back for less cash is the ’ina sale: the goods go in a circle and what remains is cash now for more later. Hanafis forbid buying back for less before the price is paid.Other views: The Shafi’i school treats the two sales as valid when no buy-back was agreed, which is why this structure appears in some markets. The Hanafi, Maliki and Hanbali schools forbid it.
People also ask
Is an Islamic personal loan halal?
There is no such thing as an interest loan made Islamic. Personal finance from Islamic banks is usually organised tawarruq, which the OIC Fiqh Academy does not allow. An interest-free loan, a real sale or a partnership are the halal routes.
What makes tawarruq genuine?
You truly own and receive the goods, you sell them yourself to a buyer unrelated to the seller, and the goods never go back to the seller. AAOIFI Standard 30 allows bank tawarruq only under those conditions.
What is the ’ina sale?
Selling on credit and buying back for less cash from the same person. The goods go in a circle and what remains is cash now for more later. Hanafis forbid buying back for less before the price is paid; the Shafi’i school treats the two sales as valid when no buy-back was agreed.
Related questions
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This guidance follows the Hanafi school as applied today by Mufti Taqi Usmani and the AAOIFI standards. Notes mark where the Maliki, Shafi’i or Hanbali schools differ. The four schools on riba →