Banking: Legitimacy of Salary Deductions for Bank Investment and Profit Distribution

Practical Laws of Islam as per the teachings of Imam Khamenei

Banking: Legitimacy of Salary Deductions for Bank Investment and Profit Distribution

English:

Question #1926:

In implementation of agreements between employees and employers, some companies and government departments deduct certain sums of money from the salaries/wages of their employees and deposit the same with a bank for investment. The employees get their share of the profit proportionate to their contributions. Is this transaction correct and, therefore, permissible? And what is the view on the profit made?

Answer #1926:

Should depositing the money with the bank take the form of a loan with the condition of getting the interest based on it or with that intention, saving the money with the bank would be ḥarām and the interest gained would also be ḥarām as a matter of religious duty. Therefore, it cannot be had nor used. However, there is no objection to such money savings, to the profit made through a shar‘ī contract and paid to the customer, or the mark up paid by the bank if the purpose is to leave the funds with the bank for safekeeping or any other shar‘ī purpose, yet without making the procurement of interest conditional or anticipating such interest. In this case there is no objection to taking receipt of the extra money which is considered as the property of the depositor.

-Imam Khamenei, Practical Laws of Islam, Importance and Conditions of Banking