Banking: Treating Bank Profit as Inflation Compensation to Avoid Ribā

Practical Laws of Islam as per the teachings of Imam Khamenei

Banking: Treating Bank Profit as Inflation Compensation to Avoid Ribā

English:

Question #1898:

Some banks grant an increase of 3% to 20% on the money deposited with them. As a means of circumventing the dabbling in ribā, is it permissible to treat this increase as a compensation for the depreciation in the purchasing power of the money deposited and thus allowing for inflation?

Answer #1898:

If the profits have been realised as a result of investing the deposited money on behalf of the customer according to a valid and shar‘ī contract, they cannot be treated as ribā. Without doubt, they are profits made from a shar‘ī transaction.

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