Fatwa

Is Mudarabah the same as Riba

Question

Asking on behalf of a friend.

I recently moved to the middle east and opened a shariah account that does not accrue interest. However after three months I saw there was a deposit from the bank into the account. When i enquired about it, reminding them it was a shariah account and should not be earning interest they told me this is Mudarabah and is not considered Riba.

Kindly explain what exactly this is and whether it is lawful for me to use this money or if it should be given away.

Jzklh khairan

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Mudharabah is a type of partnership wherein one party contributes capital and the other only makes the effort in trade (no capital contribution). It is possible for an Islamic Bank to structure its accounts along these lines, and the depositor will be the capital contributor, and the bank will be the worker/employee.

It would be best to see if the paperwork, documents, brochures etc which you were given when signing up for the account mentioned this mechanism. If it did, it is permissible to make use of the profit they have shared with you. If it does not mention this, then chances are that the bank is not fully compliant with the Shar’i requirements and as such, it will be safer to dispose of those funds and give them in sadaqah.

And Allah Ta’āla Knows Best

Mufti Bilal Pandor

Concurred by
Mufti Muhammad Patel

Darul Iftaa Mahmudiyyah
Lusaka, Zambia

www.daruliftaazambia.com