Murabaha Gold Financing: Shariah Compliant?
Question:
Assalamualaikum wrh wbh.
Respected Sheikh Ismail Desai.
Thanks a lot for your reply.
Let me set out the transaction phase.
A customer approaches bank to purchase gold.
Customer deposit 25k as security deposit
Bank purchases gold on behalf of customer as they wish and their choice and deposit the same in bank's vault.
Bank sign murabaha agrement for the said gold purchase and sell the same to client on mark up on credit basis.
Upon completing the payment period., bank gives back the same gold to the client.
Is there any issue as to charge mark up on this transaction.
If you need any further information please let me know.
Jazakallah khair.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
We sincerely apologize for our belated response.
Your question refers.
We understand from your question that the customer pays a security deposit. The bank purchases gold on behalf of the customer, deposits the gold in a vault and then sells the gold under a Murabaha agreement to the client with a mark-up on a credit basis.
The issue of trading gold for cash is based on the rules of Bay al-Sarf and currency exchange. Therefore all the rules and laws of Bay al-Sarf will be applicable. The rules and regulations of Bay al-Sarf are very clear and specific. The rules of Murabaha for a gold transaction are very complex and intricate. The concept of Qabdh/possession and the immediate effectuation (Bay Baat/Bay Nafiz) of the transaction is also of critical importance as well the interposing of Qabdh Aman to Qabdh Dhaman in terms of a Murabaha transaction.
In principle, if gold is exchanged with a currency as the counter value, then possession (Qabdh Haqeeqi/Hukmi/Actual/constructive) is required from one party and excess is allowed. For example, Zaid exchanges 100 grammes of gold for 500 USD from Bakr with immediate possession from Zaid for the 500 USD with a deferred payment of the gold from Zaid to Bakr. If possession was deferred from both ends, then this would be impermissible as that represents a double credit transaction (Bay al-Kali Bi al-Kali) which is impermissible in Shariah. (Binayah, Vol.8, Pg.358, Ikhtiyar, Vol.2, Pg.31)
Nevertheless, with regards to your specific query and based on our understanding, since the bank purchases the gold on behalf of the client and then sells the gold to the client while in the bank’s vault on a Murabaha basis, such a transaction will be impermissible for two primary reasons:
- Multiple Transactions – The bank is engaging in multiple transactions at once which is impermissible. Every transactional leg should be separated and interposed to ensure segregation of the contractual position.
- Qabdh Aman/Dhaman – The Bank is an Ameen and Dhamin at the same time without the interposing of such contractual positions which is impermissible.
- Bay al-Sarf – The bank or the client in every transactional leg should take possession either physical or constructive (Haqeeqi/Hukmi) to obviate a usurious position in the transaction.
We advise for you to email us the actual transactional diagram in order for us to guide you with the correct methodology of executing such a transaction in a Shariah Compliant manner.
And Allah Ta’āla Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee,
Darul Iftaa, Durban, South Africa
DISCLAIMER: The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
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and Allah Ta'ala Knows Best
Mufti Ismail Desai
Darul Iftaa
Durban, South Africa
Disclaimer The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
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