The following is an article written by a brother some time ago but is still useful.
Are we allowed to give sadaqah from the interest that we earn on the money in our bank accounts?
The question itself contains several errors that need to be closely examined.
1. Muslims are servants of Allah (swt), who worship Him (swt) and abide by His (swt) commands and prohibitions wherever they are, whether in Dar al-Islam (the Islamic State or the Khilafah), or in Dar al-Kufr (any land in which Islam is not implemented comprehensively. At present, all countries fall under this category). A Muslim must adhere to the Shari‘ah in his relationship with his Creator, himself and with other people, be they Muslims or non-Muslims. Therefore, he should be aware of Allah’s (swt) ruling, regarding things and actions, and he should adhere to the rule before committing any action because he will be held responsible on the Day of Judgement for his actions and sayings. Allah (swt) says,
“Therefore, by your Lord, we will of a surety, call them to account for all their deeds.” [TMQ 15: 92-93]
2. Dealing in riba is forbidden, whether this is in Dar al-Islam or in Dar al-Kufr, and whether the dealing is between two Muslims, or a Muslim and a non-Muslim.
3. Islam has allowed Muslims to live in Dar al-Kufr among non-Muslims as long as they do not neglect their individual duties, and as long as they do not get persecuted because of their deen. However, it would be mandub for them to live in the Islamic State when it is established. Emigration to Dar al-Islam would be compulsory for those who are ordered by the Khaleefah, and on anyone who is persecuted because of his deen. Evidence for this is derived from the hadith of Sulayman ibn Buraydah who narrated that the Messenger of Allah (saw) said, “Invite them to move from their land to Dar al-Muhajireen (the land of the emigrants) and inform them that if they do emigrate they will enjoy the same rights as the Muhajireen and they will have the same duties as the Muhajireen.” This hadith indicates that it is permissible for them to remain in Dar al-Kufr, but mandub for them to emigrate, because they will enjoy the same rights and have the same duties as those of the Muslims who are citizens of the Islamic State. If they do not emigrate, they will remain Muslims for Allah’s Messenger (saw) went on to say, “If they refuse to move from their homes, inform them that they will be considered as a‘rab (desert Arab) Muslims, who must perform all duties performed by Muslims, but they will have no share in the war booty whatsoever, unless they performed jihad with other Muslims.” Allah (swt) revealed the following verse concerning the Muslims who did not emigrate with the Messenger of Allah (saw) and did not live in the Islamic State in Madinah, but remained instead in Makkah,
“But if they seek help from you in the matter of the deen then it is your duty to help.” [TMQ 8:72]
This means that they can call for help and have the right of protection if they live outside the Islamic State. However, they are not entitled to the rights of guardianship, which is only for the citizens of the Islamic State, and proof for this comes from the fact that they do not qualify for the state benefits such as war booty, spoils and others.
4. Islam allows the Muslims to trade and deal with individual non-Muslims, to hire them and to work for them, provided that this work, profession or responsibilities do not violate the commands of Allah (swt). A Muslim is allowed to work in the shops and markets of non-Muslims, provided he does not sell or handle alcohol, and he does not collect, pay, record or witness riba because the Messenger of Allah (saw) said, “Allah has cursed he who takes riba, he who gives it, he who writes it and he who witnesses it.”
Regarding dealings and transactions which involves the Muslim who deposits his money as a trust with a Muslim or with the non-Muslim, it has been confirmed by Ijma‘ of the Sahabah that the Messenger of Allah (saw) deposited his shield as a security with a Jew. He (saw) died and his (saw) shield was still deposited, and the Muslims then settled the debt that was on the Messenger of Allah’s (saw) neck and recovered the shield. This was what most of the Sahabah used to do, and narrations about this are numerous.
The disbelievers have financial institutions called banks, and these are not Islamic. Islam has never known such institutions and they do not form part of the Islamic economic system. These banks keep the monies of individuals and companies and deal in interest loans, secured credit and mortgages. The distinguished Muslim scholars, whose reputations have not been tainted by working for the non-Islamic regimes ruling over Muslim land, and other parts of the world, nor the organisations which serve these regimes such as the Muslim World League, al-Azhar, al-Najaf, al-Zaytouna, Dar al-Ifta and others, have agreed on the permissibility of Muslims depositing money in banks, provided they do not take interest and they do not get involved with it in any way. If a Muslim deposits money in the bank of his own free will, the matter is mubah, however, he is forbidden from making interest a condition, to cash in interest or to take a loan based on interest.
Banks have begun in the past few years to offer interest on current accounts. So what is the Islamic verdict on the money from interest which a Muslim finds in his current account? Is he allowed to deal with it? Does he have the right to dispose of it? And how does Islam define the right of disposal? The answer to this is as follows. The money which a Muslim finds in his bank account that exceeds his capital is riba, whether it is called profit, revenues, gains or anything else. It is riba and riba is haram in Islam. The explicit evidences stating this prohibition are abundant and are definite texts with definite meaning from the Qur’an, the Sunnah and the Ijma‘ of the Sahabah. These explicit evidences are clear and concentrated, and there is no need to list all of them. They also leave no room for ijtihad or interpretation. It is sufficient to mention that Allah (swt) says,
“O you who believe! Fear Allah, and give up what remains of your demand for interest if you are indeed believers. If you do not, take notice of war from Allah and His Messenger. But if you turn back, you shall have your capital sums. Deal not unjustly and you shall not be dealt with unjustly.” [TMQ 2:278-279]
Allah (swt) also says,
“Those who devour interest will not stand except as stands one whom the Evil one by his touch has driven to madness.” [TMQ 2:275]
Furthermore, the prohibition of riba is something that is necessarily known to be part of the deen. So ijtihad on the matter is unlawful.
The amount of money that exceeds one’s capital in the bank, is money that does not belong to him, therefore he does not have the right of disposal over that money. According to the scholars, the right of disposal is defined as: to benefit from owned money. The right of disposal over one’s own money includes investing the money and disposal of it either by benefiting oneself or others, or by consuming or destroying such money, or any other actions, all of which must be done in accordance with the Shari‘ah evidences. One of the conditions of ownership in Islam is to have the right of disposal of one’s own assets or properties. Therefore, it is unlawful for a Muslim to deal or dispose of anything that is not his, unless he has the permission of the owner. For example, a software package becomes the property of the one who buys it, and Islam allows him to sell, lease, copy, or destroy the program since one of the conditions of valid ownership in Islam is free disposal. Hence, Islam does not forbid the selling, leasing or copying of the program even if the seller puts conditions on the buyer. This is so because Muslims must honour all conditions except conditions that forbid what is halal or allows a haram thing or an action. Therefore, Muslims are not bound by any invalid conditions, because the right of ownership gives them the right of free disposal.
In the light of this the money a person gains from depositing money in the bank, is riba and this money is not his, and no Muslim is allowed to use it or dispose of it in any way whatsoever, be it to benefit himself or allowing others to benefit from it, or to invest, consume or destroy such money. If the interest money appears in the bank account, a Muslim is not sinful, although the money is not lawful for him. However, the moment he disposes of such money he becomes sinful, because he is dealing in riba, which is a rebellious act against Allah (swt) and His Messenger. If a Muslim deals in that money, whether by giving it to the poor or by returning it to the bank manager or any other bank official, or using it to destroy it and get rid of it, or to personally benefit from it, he would in this case fall into sin, because he is disposing of money that was not his in the first place. However, if a Muslim left that money in his bank account and ignored it completely, not disposing of it in any way whatsoever, he would not be sinful, for it would be regarded simply as money that had no owner. Hence there is no need for the government scholars to complicate the issue by making it permissible, halal. So, what should a Muslim do if interest appeared on his bank statement? He should ignore it completely, for its use is not halal and disposing of it in any manner whether to benefit from it or destroy it is not halal either. Thus the verdict is that it is money that has no owner and no legal guardian.
The Islamic Schools of Thought agree that the Imam (i.e. the Khaleefah) is the guardian of he who has no guardian, and that the Imam is the guardian of the money that has no legal guardian or owner, and for monies that have no claimants. In this case the monies are categorised as fay’i (booty) which Allah (swt) allowed the Muslims to gain from the non-Muslims. Al-Bukhari, Muslim and al-Tirmidhi reported on the authority of al-Miqdam al-Kindi that the Messenger of Allah (saw) said, “I am more responsible for a believer than he is for himself, so whoever left a debt or children, they would be for his heir; and I am the guardian of the one who has no guardian, I inherit his money and ease his suffering.” In the absence of the Imam, no one is allowed to take up his mandatory powers, but we are commanded to work towards establishing the Islamic State and appointing an Imam. It is not lawful to establish associations that have as an aim the running of the Muslims’ affairs instead of the Imam. What some Muslims do is merely the imitating of the Christians and the Jews, basing their arguments on wild and imaginary evidences and misinterpretations of the Qur’anic verse,
“Help one another in goodness and piety.” [TMQ 5:2]
Co-operation in what is birr (good) and taqwa (piety) does not mean violating the command of Allah (swt), nor does it mean the taking over of the Imam’s responsibility. It means we should perform good deeds, not to act as permanent guardians and governors - these are the duties of the Islamic State. Imam Abu Hanifah said, “The Imam is the lawful guardian of the money that has no guardian or owner; and the Imam is the guardian (benefactor) of the money (assets) of the murtad (apostate) and the dhimmi (non-Muslim citizen of the Islamic State) who has no inheritors.”
This means that only the Islamic State can apply the right of disposal regarding the money that has no owner. All that is asked of the Muslim who fears Allah (swt) is to use only his own capital and not to touch any surplus money, nor to close his account, because the closing of the account means disposal of the riba either by leaving it to the bank or by taking it, and this is haram for the Shari‘ah principle states ‘whatever leads to haram is itself haram.’. Some Schools of Thought say it is preferable for a Muslim to mention in his will that there is an amount of interest in his bank account that he has no right of disposal over. By doing these things, he will lift the sin from his neck, leaving everything else to the Islamic State which will soon be established, insha’Allah .
In the absence of the Khaleefah the riba cannot be touched, but when the country becomes part of Dar al-Islam (i.e. by establishing the Khilafah in that country or when that land is conquered by the Islamic State), then the riba becomes the property of the Islamic State and the Imam its guardian.
When some people attempt to legitimise this money by giving it to the poor, they fall into a grave error for they have endorsed (issued a fatwa to the people) regarding the lawfulness of the disposal of money which does not belong to them. The fact that it is in their own bank accounts, as we have seen means nothing under the Islamic Shari‘ah. And since some of those who are intellectually defeated (whose policies are based on co-existing with the current reality and the present situation, rather than working towards changing it according to the command of Allah (swt)), have approved of the giving of such money to the poor, they have allowed themselves to fall into flagrant sin, for they have given the people a fatwa to deal in monies that do not belong to them. If a Muslim asks for the Shari‘ah verdict in any matter in a sincere manner, he should realise that the Shari‘ah rule is the speech (address) of the Legislator connected with the actions of the people; i.e. Allah (swt), Who will ask every Muslim about his actions, big or small. Allah (swt) has prohibited us from disposing of something that does not belong to us. If a non-Muslim has credited a Muslim’s bank account with interest, without any prior agreement, the Muslim in this case is not held responsible because he did not initiate any action in this instance. However, when he withdraws this interest, he commits a sin the moment he disposes of the money regardless of his intention.
Listen to the idiocy of the invented fiqhi stories coming from the government sheikhs, listen to their attempts at changing the meanings and names when they legitimise riba. They say, “The Muslim is allowed to take riba, provided he pays it to charity organisations and to the poor.” And they claim there is no reward from such actions and it will not be counted as zakat. The question we ask the government scholars is this: How do you know that he is not rewarded and that he is not accountable for his actions, knowing that reward is in the hands of Allah (swt) alone, and knowing that the Muslim is responsible for all his actions, big or small, for Allah (swt) says,
“Then shall anyone who has done an atom’s weight of good see it! And anyone who has done an atom’s weight of bad, shall see it.” [TMQ 99:7-8]
Finally, I remind myself and all the Muslims, especially government scholars, to fear Allah (swt) and obey Him (swt), and of the hadith of the Messenger of Allah (saw) which was narrated by Imam Ahmed on the authority of Abu Malik al-Ashja‘i that he heard the Messenger of Allah (saw) saying, “People from my Ummah will drink khamr (alcohol) while giving it a different name.” Ibn al-Qayyum mentioned in his book the hadith of the Messenger of Allah (saw) which says, “I only fear for my Ummah three things after I’ve gone.” They said: “What are these O Messenger of Allah ?” He (saw) said: “I fear for you from the lapse of the scholar, the rule of a tyrant and the whim of a follower.” Such above charity organisations should fear Allah (swt) and review the lawfulness of their foundations according to the Book and the Sunnah. They should review their opinion which endorses the withdrawal of interest by the Muslims, which has reached the point where some of them have begun bargaining with the banks over the highest rate of interest and transferring their accounts from current to deposit ones, in order to gain a higher rate of interest, under the pretext of helping the poor, and in case a time comes that they may find that their families are poor, they allow themselves to take interest. Therefore, the charity organisations and government scholars would have participated in permitting something that is forbidden by definite evidence. There is no power and no strength except from Allah (swt).