Islamic Finance

  • Is the Nisab for Zakah in Canada Based on Gold Only, and Why Is 21K Gold Used?

    Is the Nisab for Zakah in Canada Based on Gold Only, and Why Is 21K Gold Used? QuestionSalam Imam, is the nisab for zakah based on gold and not silver today, since cash is no longer backed by silver? And is the correct gold standard 21K gold rather than 24K or 14K? How is this…

  • What Is the Sharia Ruling on Investing in Real Estate Investment Trusts (REITs)?

    What Is the Sharia Ruling on Investing in Real Estate Investment Trusts (REITs)? QuestionAssalam alaykum Sheikh. Please we need a fatwa stand on the following business related question. Real estate investment trusts (REITs) are companies that own, operate, or finance income producing real estate across a wide range of property sectors. They raise capital by…

  • Is General Forex Trading Haram, and Does Trading Gold, Silver, or Platinum Change the Ruling?

    Is General Forex Trading Haram, and Does Trading Gold, Silver, or Platinum Change the Ruling? QuestionSalam alaykum. Is general forex trading haram? What if it is used only for buying earth minerals like gold, silver, and platinum? Would it be permissible in this case? Jazakum Allah khair. AnswerAlhamdulillah, wassalatu wassalamu ala rasulillah, wa ala alihi…

  • Is It Permissible to Provide Marine Technical Services as a Contractor to Insurance Companies?

    Is It Permissible to Provide Marine Technical Services as a Contractor to Insurance Companies? QuestionAssalamualaikum dear sheikh. I have a small marine consulting business where insurance clients approach me to request technical inspections and advice on ships, boats, and other marine structures. I do not get involved in approving or denying claims, nor do I…

  • What Is the Sharia Ruling on Money Earned from Bank Interest (Riba al-Bunuk)?

    What Is the Sharia Ruling on Money Earned from Bank Interest (Riba al-Bunuk)? QuestionSalamu alaykum, I hope you are well.I would like to ask about money kept in the bank when a person receives extra money from the bank, known as riba al-bunuk (bank interest). What is the Sharia ruling in this case? Is the…

  • Is It Permissible to Keep, Use, or Donate Profits from a Shariah-Screened Investment ETF?

    Is It Permissible to Keep, Use, or Donate Profits from a Shariah-Screened Investment ETF? QuestionSalaam alaikum warahmatullah wabarakaatu. I invested some money into an investment that claims to be halal and that it “complies with Shariah law and excludes companies deriving more than 5% of their income from alcohol, tobacco, pork-related products, weapons, conventional banking…

  • Is a Contractor Required to Credit the Fair Market Value of a Deleted Item, or Only What He Actually Budgeted?

    Is a Contractor Required to Credit the Fair Market Value of a Deleted Item, or Only What He Actually Budgeted? QuestionSalam. A person submits a quote for a construction project based on a set of drawings. The drawings include item X. Later the client decides to cancel item X from the scope. He asks for…

  • Do I Have to Pay Zakah on Money I Loaned to Others, and What If the Borrower Cannot Repay?

    Do I Have to Pay Zakah on Money I Loaned to Others, and What If the Borrower Cannot Repay? QuestionDo I have to pay zakah on a loan that I have loaned to people? And what if they cannot pay it back and they are poor? Do I have to pay zakah on it? Can…

  • Is It Permissible to Purchase Company Shares When the Company Provides Supply-Chain Analytics?

    Is It Permissible to Purchase Company Shares When the Company Provides Supply-Chain Analytics? QuestionAs Salam U Alaikum,i wanna ask you about the permissibility of buying stock/equity that my company is offering me. Below is a simple explanation of what my company does. Everstream Analytics provides supply-chain risk forecasting for companies (weather risk, shipping delays, political…

  • What Is the Ruling on Interest Earned from Everyday Savings Accounts in Banks Like TD?

    What Is the Ruling on Interest Earned from Everyday Savings Accounts in Banks Like TD? QuestionWhat is the ruling on interest from Everyday Savings Accounts with banks such as TD?I recently opened a savings account to keep my money organized, but I do not want to deposit anything until I know the ruling. The bank…

  • Is Lead Generation for Mortgage Agents Permissible, and What Should Be Done With Past Income?

    Is Lead Generation for Mortgage Agents Permissible, and What Should Be Done With Past Income? QuestionIn the Name of Allah, the Most Gracious, the Most Merciful.Peace, mercy, and blessings of Allah be upon you. My name is Abdul Samad. I live in Pakistan but run an online lead-generation and marketing business in Canada. My work…

  • Is a Builder Allowed to Take on a Construction Project When the Client Is Financing It Through an Interest-Based Bank Loan?

    Is a Builder Allowed to Take on a Construction Project When the Client Is Financing It Through an Interest-Based Bank Loan? QuestionA brother in construction is asking: if he knows or is almost certain that his client is obtaining an interest-based loan from a conventional bank to finance the construction, is it permissible for him…

  • Is It Permissible to Purchase Short-Term Event Insurance?

    Is It Permissible to Purchase Short-Term Event Insurance to Rent a Hall for a Sisters-Only Gathering? QuestionAsalamou aleykoum,I’m planning a small sister-only gathering to celebrate moving into my husband’s home after my nikkah. My current apartment is too small to host everyone, so I’m looking into renting a small hall. Most venues I’ve found require…

  • Is a TFSA (Tax-Free Savings Account) Permissible in Islam?

    Is a TFSA (Tax-Free Savings Account) Permissible in Islam? QuestionIs a TFSA account haram? I read that it helps you avoid paying taxes on your savings, but since the bank invests that money and adds interest to it, is it still permissible to use? AnswerAlhamdulillah, wassalatu wassalamu ala rasulillah, wa ala alihi wa sahbihi ajma‘in.…

  • Is It Permissible to Take a Conventional Mortgage in Cases of Severe Hardship?

    Is It Permissible to Take a Conventional Mortgage in Cases of Severe Hardship? Questionبسم الله الرحمن الرحيمAs-salamu alaykum wa rahmatullahi wa barakatuh, I have always tried to avoid interest and refused to apply for a conventional mortgage, as riba is prohibited in Islam. I applied for an Islamic mortgage, but I was only approved for…

  • Car Financing Through Toyota: Bank vs. In-House

    Car Financing Through Toyota: Bank vs. In-House QuestionAssalamu Alaikum wa Rahmatullahi wa Barakatuh,I recently went to Toyota to finance a car. They told me they will give me the car through financing, and the monthly payments include interest. They said the price of the car will not change, but there will be interest added. My…

  • Professional Liability Insurance for Dietitians in Canada

    Professional Liability Insurance for Dietitians in Canada QuestionAssalam alaikum wa rahmatullahi wa barakatuh! I was wondering if you are familiar with services that provide professional liability insurance for dietitians in Canada that aligns with Islamic principles (takaful). In order to have and to maintain the permit of dietitians, it entails the following rules: College of…

  • Is Servus Halal, which has started launching in Alberta, a Murabaha or Musharakah product?

    QuestionIs Servus Halal, which has started launching in Alberta, a Murabaha or Musharakah product? What are the terms? AnswerAlhamdulillah, wassalatu wassalamu ala rasulillah, wa ala alihi wa sahbihi ajmain. What Servus Halal Is Key Terms of Servus Halal Mortgage Product Compliance with AAOIFI Standards Servus Halal has been structured in compliance with the standards of…

  • What is the ruling on investing in stocks?

    QuestionWhat is the ruling on investing in stocks? AnswerAlhamdulillah, wassalatu wassalamu ala rasulillah, wa ala alihi wa sahbihi ajmain. The General Principle The usul principle is: “Al-asl fi al-mu‘amalat al-ibahah” the default ruling in financial transactions is permissibility, unless there is clear evidence of prohibition. Therefore, investing in stocks is permissible in principle, provided the…

  • Is renter’s insurance allowed?

    QuestionAs-salamu alaykum wa rahmatullahi wa barakatuh. I have a question about tenant’s (renter’s) insurance. If a landlord requires tenant’s insurance as a condition for renting an apartment, are we allowed to purchase it? And is tenant’s insurance considered a necessity for living in a rental property in Edmonton? Jazakumullahu khayran. AnswerAlhamdulillah, wassalatu wassalamu ala rasulillah,…

  • Is car leasing/financing haram because it requires full insurance?

    QuestionSalam, I was told it was required to get the lowest coverage insurance for my vehicle in Canada because insurance is haram. When leasing or financing a vehicle it is required to obtain full coverage insurance by the company leasing or financing the car to you. Question #1 – Is obtaining full coverage insurance for…

  • Is working as a salesman at a car dealership is haram?

    QuestionSalam, I would like to know if working as a salesman at a car dealership is haram? Please let me know. Jazakallahu khayran. AnswerAlhamdulillah, wassalatu wassalamu ‘ala rasoolillah, wa ‘ala alihi wa sahbihi ajma‘in. The ruling depends on the type of sales and financing that the dealership uses. Islamic jurisprudence distinguishes between permissible trade and…

  • Can interest earned be used to pay off debt?

    QuestionCan interest earned be used to pay off debt? AnswerAlhamdulillah, wassalatu wassalamu ‘ala rasoolillah, wa ‘ala alihi wa sahbihi ajma‘in. Earning interest (riba) is haram, and a Muslim should avoid placing his wealth where it accrues interest whenever possible. The Prophet ﷺ cursed the one who consumes riba, the one who pays it, the one…

  • Can I take a line of credit for educational purposes?

    Question I am seeking a religious ruling on using a line of credit for educationI am a dentist living in Canada and I wish to start the Canadian dental equivalency process. In order to register for my first exam and the preparation course, I need a significant amount of money.I previously worked as a dental…

  • What is the ruling on purchasing full (comprehensive) insurance in Islam?

    QuestionWhat is the ruling on purchasing full (comprehensive) insurance in Islam? AnswerAlhamdulillah, wassalatu wassalamu ‘ala rasoolillah, wa ‘ala alihi wa sahbihi ajma‘in. Insurance is a modern financial product that did not exist in classical fiqh, so the scholars have had to analyze it according to the principles of Shariah. Full or “comprehensive” insurance covers not…

  • What is the ruling on working in the Human Resources (HR) department of a conventional bank?

    Question:What is the ruling on working in the Human Resources (HR) department of a conventional bank? Answer: Alhamdulillah, wassalatu wassalamu ‘ala rasulillah, Riba (usury/interest) is categorically forbidden in Islam, by Qur’an, Sunnah, and ijma‘. The Prophet ﷺ cursed the one who consumes riba, the one who pays it, the one who records it, and those…

  • I lent money in CAD but the recipient received it in PKR. How does he pay it back?

    QuestionI lent someone some money. I paid $1000 Canadian Dollars through an app, and he received about 190,000 Pakistani Rupees. Now, he wants to pay me back and I’m in Pakistan, so he will pay me in Rupees. But the value in Rupees changed, and now it’s around 205,000 Rupees to $1000. My question is:…

  • The rulings of day trading, short selling, options and gold trading.

    The rulings of day trading, short selling, options and gold trading. Praise be to Allah. 1. Day Trading (Cash Equities) 2. Day Trading with Margin 3. Short Selling 4. Options 5. Gold Trading Forms in the West: And Allah knows best.

  • Can crowdfunding for a halal startup or business idea be considered acceptable under Islamic investment rules?

    Bismillah Ar -Rahman Ar-Raheem, Question:Can crowdfunding for a halal startup or business idea be considered acceptable under Islamic investment rules? Answer:Crowdfunding refers to raising small amounts of capital from a large number of people, typically via an online platform, to fund a project, startup, or business. The concept itself is not inherently prohibited in Islam…

  • Musharakah: Islamic Partnership Contracts and Their Modern Applications

    The Prophet ﷺ said regarding partnerships: “The hand of Allah is with the two partners as long as they do not betray each other.”(Narrated by Abu Dawud, 3383; classed as hasan) Musharakah: Islamic Partnership Contracts and Their Modern Applications Definition:Mushārakah (مشـاركة) is an Islamic partnership contract in which two or more parties contribute capital to…

  • Is using buy-now-pay-later (BNPL) services Islamically permissible if paid off within the grace period?

    Question:Is using buy-now-pay-later (BNPL) services Islamically permissible if paid off within the grace period? Answer: 1. What are BNPL (Buy-Now-Pay-Later) Services? BNPL services allow customers to purchase goods immediately while delaying full payment. Typically, they offer: 2. Scholarly Consensus (Ijma‘) and Established Opinions Contemporary Islamic jurisprudential bodies, including AAOIFI and the International Islamic Fiqh Academy,…

  • Is reverse mortgage (home equity release) permitted for Muslim homeowners to fund retirement needs?

    Question:Is reverse mortgage (home equity release) permitted for Muslim homeowners to fund retirement needs? Answer: 1. Understanding Reverse Mortgage (Home Equity Release) A reverse mortgage allows elderly homeowners to borrow money against the equity in their home. Repayment usually occurs upon the homeowner’s death, sale of the property, or permanent relocation. The loan typically accumulates…

  • Is leasing a car halal?

    Question:Is it halal to lease a car if the owner is not financing it? Since I’m not owning the vehicle and I don’t plan to buy it at the end, can I consider it as renting a car? Is it permissible to have full insurance coverage for the leased car? And who is supposed to…

  • Can Muslims invest in ESG funds if they include companies with minor interest-based income?

    Question:Can Muslims invest in ESG funds if they include companies with minor interest-based income? Answer: 1. Definition and Nature of ESG Funds What are ESG Funds? ESG funds are investment funds prioritizing companies that meet specific criteria related to: However, these ESG funds may include companies that, although primarily ethical in business practices, generate a…

  • How should Muslims calculate zakah on digital assets like NFTs, stablecoins, and token holdings?

    1. Understanding Digital Assets in Islamic Terms Before calculating Zakah, it’s essential to classify digital assets according to traditional Islamic jurisprudential categories. Contemporary scholars generally categorize digital assets as follows: Zakah calculation differs based on these categories. 2. Conditions for Zakh Obligation Zakah is obligatory when these general conditions are met: 3. Calculating Zakah by…

  • Repaying a Loan After Currency Collapse

    Question:If someone lends money in Lebanese lira, and at the time of the loan it was worth a certain amount in US dollars, but the currency later collapses — can the lender request repayment in Lebanese lira equal to the original dollar value? Answer:Bismillahir Rahmanir Rahim In cases of economic collapse or severe devaluation, Islamic…

  • Are cashback and rewards from credit cards considered ribā (interest)?

    Question: Are cashback and rewards from credit cards considered ribā (interest)? Answer: بِسْمِ اللَّهِ الرَّحْمَنِ الرَّحِيمِ، الْـحَمْدُ لِلَّهِ رَبِّ الْعَالَمِينَ، وَالصَّلَاةُ وَالسَّلَامُ عَلَى أَشْرَفِ الْأَنْبِيَاءِ وَالْمُرْسَلِينَ، نَبِيِّنَا مُحَمَّدٍ، وَعَلَى آلِهِ وَصَحْبِهِ أَجْمَعِينَ، وَمَنْ تَبِعَهُمْ بِإِحْسَانٍ إِلَى يَوْمِ الدِّينِ. Conventional credit card agreements usually include a clause allowing the issuer to charge interest (ribā) on late…

  • Can a Muslim invest in conventional stock markets or ETFs?

    Question: Can a Muslim invest in conventional stock markets or ETFs? Answer: بِسْمِ اللَّهِ الرَّحْمَنِ الرَّحِيمِ، الْـحَمْدُ لِلَّهِ رَبِّ الْعَالَمِينَ، وَالصَّلَاةُ وَالسَّلَامُ عَلَى أَشْرَفِ الْأَنْبِيَاءِ وَالْمُرْسَلِينَ، نَبِيِّنَا مُحَمَّدٍ، وَعَلَى آلِهِ وَصَحْبِهِ أَجْمَعِينَ، وَمَنْ تَبِعَهُمْ بِإِحْسَانٍ إِلَى يَوْمِ الدِّينِ. Investment and business ownership are generally permissible in Islam, provided they are free from prohibited elements such…

  • What is the ruling on cryptocurrencies in Islamic finance?

    Question: What is the ruling on cryptocurrencies in Islamic finance? Answer: بِسْمِ اللَّهِ الرَّحْمَنِ الرَّحِيمِ، الْـحَمْدُ لِلَّهِ رَبِّ الْعَالَمِينَ، وَالصَّلَاةُ وَالسَّلَامُ عَلَى أَشْرَفِ الْأَنْبِيَاءِ وَالْمُرْسَلِينَ، نَبِيِّنَا مُحَمَّدٍ، وَعَلَى آلِهِ وَصَحْبِهِ أَجْمَعِينَ، وَمَنْ تَبِعَهُمْ بِإِحْسَانٍ إِلَى يَوْمِ الدِّينِ. Cryptocurrencies are a modern financial phenomenon not explicitly addressed in classical fiqh texts. However, their permissibility is assessed…

  • Is in-house financing for vehicles always halal?

    QuestionDoes in-house financing for vehicles always comply with Shariah? Or are there any specific requirements we should follow? Answer: Praise be to Allah. Firstly: The principle of financing in Islam Financing in Islam must comply with the principles of Shariah, which forbid riba (interest) and emphasize valid contracts, clear terms, and ownership of goods before…

  • Can I contribute to the Employee Investment Program that the company I work for offers?

    QuestionCan I contribute to the Employee Investment Program that the company I work for offers?Salamu Alaikum. My company offers a program where I can invest money into the company and receive a guaranteed return of at least 10%, with the possibility of earning more depending on the company’s performance. Earnings are calculated monthly based on…

  • Can you explain halal financing through a Murabaha agreement?

    Question: Can you explain what Halal financing through a Murabaha agreement is, and how it differs from conventional financing? Answer : Murabaha is one of the most straightforward contracts in the Islamic finance industry. Simply put, it is a cost-plus-profit sale. But it must meet several key conditions (cornerstones): 1. Ownership:The financial institution (in this…

  • Is it allowed to work for MasterCard or Visa?

    Question: Is it allowed to work for MasterCard or Visa? Answer:It depends on the nature of the work. MasterCard and Visa primarily operate in the financial sector, offering services that are largely based on interest-bearing (riba) contracts, which are not considered halal in Islamic finance. Therefore, it is not permissible to be directly involved in…

  • Do I have to pay zakat on my watch collection?

    Question: Do I have to pay zakat on my watch collection? Answer: It depends on your intention behind owning the watches. If you bought the watches as an investment, with the intention of selling them later to make a profit, then zakat is due on their current market value. In this case, they are considered…

  • Do Women Pay Zakat on Their Personal Gold Jewelry?

    Do Women Pay Zakat on Their Personal Gold Jewelry? How to Understand the Hadiths and the Different Opinions 1. The Hadith About the Gold Bangles This is one of the key hadiths used as evidence by the Hanafi school: A woman came to the Prophet ﷺ with her daughter wearing two thick gold bangles.He asked,…

  • Can I use a credit card?

    Question: How to live in western society without a credit card? Ex- rent, travel, credit score, etc. And how to discuss with family that wants you to get a credit card. Answer: According to the Assembly of Muslim Jurists of America (AMJA), in today’s Western society, especially in North America, having a credit card has…

  • What Is the Ruling on Pitching Phone Warranties and Late Payment Fees When Working at a Telecom Company?

    Question: What Is the Ruling on Pitching Phone Warranties and Late Payment Fees When Working at a Telecom Company? QuestionIf someone works at a phone company (such as Telus) and is required to pitch warranties on the phones they sell, what is the ruling on that? Also, what is the ruling on late payment fees…

  • Are pawn shops allowed in Islam?

    Are pawn shops allowed in Islam? There are two situations to consider when it comes to pawn shops in Islam: 1. Selling Your Item with No Strings Attached:If you sell your item to the pawn shop for a fixed price, and there’s no agreement to buy it back or change your mind later, this is…

  • Why is in-house car financing halal if it involves interest, and how is it different from a mortgage?

    Question: When in-house financing a car through Toyota, you can go through their own Toyota Financial Services . They still charge interest on the loan provided, why is this halal and how is it different then getting a mortgage through a bank? Answer: Buying a Car through Islamic Financing: What’s Allowed and What’s Not When…

  • Halal mortgage versus conventional mortgage

    There is a difference between a halal Murabaha mortgage and a conventional mortgage, both in structure and underlying principles. 1. Fundamental BasisConventional Mortgage: Involves a loan with interest (riba). The bank lends you money to buy a house, and you repay it with interest over time. Murabaha Mortgage: Based on Islamic finance principles that prohibit…

  • Buying a Car through Islamic Financing: What’s Allowed and What’s Not

    Buying a Car through Islamic Financing: What’s Allowed and What’s Not Question: When financing a car through Toyota, you can go through their own Toyota Financial Services . They still charge interest on the loan provided, why is this halal and how is it different then getting a mortgage through a bank? Answer: When you…

  • Zakah on lent money

    Zakah on lent money Q: Do I have to pay zakah on money I lent to someone else?A: It depends on the financial status of the borrower: Scenario: The borrower is wealthy and capable of repaying Example:If you lent $20,000 and you have $1,000,000 in your account: Scenario: The borrower is struggling or refuses to…

  • How to calculate zakah on Inheritance

    How to calculate zakah on Inheritance Q: How do heirs calculate zakah on inheritance?A: Each heir must: Example:If a person has $70,000 in personal wealth and their share of inheritance is $20,000, they will: Q: What if the inheritance hasn’t been distributed yet?A: If the inheritance remains undivided for a full year, then zakah is…

  • Zakah on Inherited wealth

    Zakah on Inherited wealth Q: Does zakah apply to inherited wealth or wealth that has reached the nisab and a full year has passed?A: Yes, zakah is due on inherited wealth as long as it: Wallahu Alam