is bank profit interest

Salam

I didnt get the question very well but any bank profit is Riba to me
Money to Money
 
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Assalamoalaikom

Please ask a muslim scholar or the mufti where you live and describe the case in detail.

It depends on the bank transaction, some are directly classified as riba, while others are not.
 
Dagless said:
What products do banks sell which is not based on interest?
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Houses, cars etc. Strictly speaking it's counted as profit as they buy the product and then you buy it off them for a higher price (usually paid off in installments)

When I say sale of money, I'm referring to loans (which is what you pay interest on) or what the banks invest it's customers money in (which is done behind the scenes)
 
if youre talking about islamic banks, then the profit isn't interest (if they are doing their business strictly according to islamic rules which means no charging money based on time, like late charges, charges on loans, etc.) Islamic banks do their business through several ways. some of them are: 1. you want to buy a house or car. you go to the islamic bank. instead of them giving you a loan, they buy the car / house first and then resell it to you at a higher price. the difference between the price and their cost is their profit. you can pay installments or all at once, but of course you are more likely to pay in installments which is why you bought the item through the bank at the higher price. in any case, the amount you pay the bank shouldn't change with the time. for example, if you inherit a huge amount of money and want to pay the bank at once, the amount you pay would be the same that you would pay in installments or else they would be dealing with interest without declaring it.

2. you want to start a business but don't have money. you go to an islamic bank. they give you the money and become partners in your business. they then share in the profit and loss of your business.

on the other hand, the profit of a traditional bank is interest because they mostly earn money through giving loans. whether you want to buy a house or start a business, the conventional banks will give you cash and you will have to return that amount along with an interest payment. their profit is the difference between the interest they charge you and the interest that they give to depositors (who put money in bank accounts) (minus other expenses like salaries and bills, etc).
so profit of conventional banks is mostly derived from interest money.

even if conventional banks earn profit through other ways, like service charges on money transfers, etc. this amount is small compared to interest income and you can't separate this amount from the interest they earn.

the only time you can be sure whether their income is from interest or profit from other means is when they have a separate non-interest branch and they don't combine the profits from this branch with their conventional banking branch.

Please if anyone doens't have knowledge then they shouldn't reply in these matters as this is the matter of interest which is a grievous sin.
 
WRITER said:
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Please if anyone doens't have knowledge then they shouldn't reply in these matters as this is the matter of interest which is a grievous sin.
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Not to brag or anything, but I hold a degree is in business and marketing, and a masters in Islamic finance.
 
:sl:

Many years ago, I taught English to an Arabic language teacher from Saudi Arabia. I asked him what happens in Saudi Arabia when someone needs a quick loan. This is what he told me:

Let's say A needs money in a hurry. He goes to B who is known to be able to help people like him. B sells a car to A for, say 1000 usd. Actually, the car is only worth, say, 900 usd. A takes the car and sells it for 900 usd. Later he pays back 1000 usd to A.

Also, my student told me that his government gives loans to its needy citizens. A, like in the case above, can borrow 1000 usd from the government. Then he pays back only 1000 usd to the government in installments. According to my student, if A repays the loan in less time than the period of repayment agreed upon, A actually pays less than 1000 usd. I wonder if the Saudi government is still doing this.
 
aamirsaab said:
Not to brag or anything, but I hold a degree is in business and marketing, and a masters in Islamic finance.
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and i've studied accounting and islamic banking enough to know what profit is and isn't. profit in any business is the difference between your income and expenses, whether your income is from selling something or from providing loans. a banks main income isfrom giving out loans and their main form of profit is the difference between the interest the earn and the interest they give to depositors (subtract other expenses like utility and administrative expenses to get tonet profit).

Most conventional banks earn money by giving out loans. they normally don't deal with goods directly, for example they won't directly buy a house or car first and then sell it to you. when you want to buy a car or house or start a business, the bank gives you a loan and then you pay interest to them on that loan. the bank doesn't share in your losses.

on the other hand, an islamic bank buys the product first and then sells it to you at a higher price or has a share in your business and shares in your profit and loss. this is why conventional bank income is haram and islamic bank income is halal.
 
WRITER said:
Most conventional banks earn money by giving out loans. they normally don't deal with goods directly, for example they won't directly buy a house or car first and then sell it to you. when you want to buy a car or house or start a business, the bank gives you a loan and then you pay interest to them on that loan. the bank doesn't share in your losses.

on the other hand, an islamic bank buys the product first and then sells it to you at a higher price or has a share in your business and shares in your profit and loss. this is why conventional bank income is haram and islamic bank income is halal.
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Same like Islamic bank, conventional bank also buy the goods first, then they give that goods to you. But different than Islamic bank, in conventional bank the installment is based on loan with interest and usually based on floated rate of interest. How much you must pay to the bank next month maybe different than amount you must pay this month.

Islamic bank buy the good first, then sell it to you with price that has been added with their profit, it is based on trading. And you pay installment every month in fixed amount.
 
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source: http://www.islamicboard.com/urdu/13...5-1740-1705-1578-1575-1576-1740-1722-a-8.html
BOOK# 2, Safai Mahmalat
 

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