In a recent statement, Dr. Ali Fakhr, Deputy Head of Fatwa at Egypt's Dar Al-Ifta, addressed concerns over the legitimacy of profits from bank certificates. He assured that it is permissible to receive such profits, as they are considered investment returns rather than usury. This clarification aims to alleviate public concerns and provide a clear understanding of the matter.
Dr. Fakhr explained that modern banks operate as investment entities, utilizing deposited funds in various economic projects and activities. Consequently, customer profits arise from these investments. He emphasized that the controversy surrounding bank certificates stems from an outdated perception of banking, where banks were seen as borrowing money and repaying it with interest, a practice considered usury.
However, contemporary studies by scholars of Islamic law and economists have established that banks do not borrow but rather invest funds, generating profits that are then distributed to depositors. This understanding has led to the conclusion that engaging with banks in this manner is permissible, especially given the evolution of banking practices.
The determination of profit rates by banks is based on actuarial studies that analyze previous investment outcomes. The Central Bank of Egypt sets the appropriate rate to balance the interests of both banks and depositors. Dr. Fakhr stressed that these profits are legitimate and do not constitute usury, as they result from actual investments rather than mere loan interest.
Dar Al-Ifta's stance is grounded in comprehensive studies that have evaluated the nature of modern banking. These studies involved collaboration between Islamic scholars and economic experts, leading to a consensus on the permissibility of bank certificate profits.
The clarification by Dar Al-Ifta is expected to provide reassurance to the public and investors regarding the legitimacy of bank certificate profits. This is particularly significant in Egypt, where a substantial portion of the population invests in bank certificates as a means of saving and generating income.
Ultimately, Dr. Fakhr's statement underscores the importance of understanding the evolving nature of banking and investment practices. By recognizing that bank certificate profits are derived from legitimate investments, individuals can make informed decisions about their financial activities, confident in their compliance with Islamic principles.
Key points
- Bank certificate profits in Egypt are considered halal, or permissible, under Islamic law.
- These profits are viewed as investment returns rather than usury.
- The determination of profit rates is based on actuarial studies and oversight by the Central Bank of Egypt.
