Islamic Finance

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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, … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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 … Read more

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

Zakah on RRSP (Registered Retirement Savings Plan)

Zakah on RRSP (Registered Retirement Savings Plan) Q1: Do I have to pay zakah on my RRSP or other savings plans like educational savings?A1: Yes, you have to pay zakah if: Q2: But what if I can only access my RRSP funds after many years (like 20–25 years)?A2: If you don’t have full access, zakah … Read more

Zakah on RRSP & Registered Educational Plans

Zakah on RRSP & Registered Educational Plans Q: Do we have to pay zakah on a registered educational plan or RRSP? A: Yes, zakah is due if the amount reaches the nisab (around $11,000 CAD) and has been held for a full year, as long as you have access to it. Q: What if I … Read more

Mortgages in islam

 MORTGAGE & HOMEOWNERSHIP 15. Q: What is the general Islamic ruling on riba-based mortgages? A: The general ruling is that riba is haram. Taking a conventional mortgage involving interest is not permitted. 16. Q: Can someone take a riba-based mortgage due to housing difficulties? A: Only in extreme necessity (darurah)—such as when a person with many dependents cannot find … Read more

Car Loans in islam

 CAR LOANS & PERSONAL FINANCING 24. Q: Is it permissible to take a riba-based loan to buy a car? A: No. Car loans that involve interest are not permissible if halal alternatives exist (e.g., in-house financing). 25. Q: What if luxury car brands don’t offer halal options (e.g., Mercedes)? A: That does not justify taking riba. One should choose a more affordable vehicle … Read more

Student Loans

1. Q: Can a student take a loan just to access attached grants, if they already have enough money? A: Yes, if the loan is interest-free for a set period (e.g., six months) and the borrower: Then this is permissible, based on the principle: “Al-umūr bimaqāsidihā” – Actions are judged by intentions. 2. Q: Are student loans that include interest (riba) … Read more

Q & A – Islamic Finance

Q&A Collection: Student Loans, Riba, Mortgages & Halal Finance Dr. Mahmoud Omar Organized by Topic for Clarity STUDENT LOANS & FINANCIAL AID 1. Q: Can a student take a loan just to access attached grants, if they already have enough money? A: Yes, if the loan is interest-free for a set period (e.g., six months) … Read more

Ownership, Investment & Intention

Q: If a child pays off their parents’ debts, such as mortgages and car loans, does that make them the owner of those assets? A: It depends on the intention. If the money was given as a gift (hibah) with no expectation of return or ownership, then the asset remains the parents’ property. But if … Read more