Fatwa ID: 07370

 

Answered by: Mufti Mohammed Dilwar Hussain

 

Question:

 

Can I provide zero percent finance to my customers for bathroom sales.

 

I will be charged 20% of order value fee from finance company for this service.

 

Is this ok ?

 

 

In the name of Allāh, the Most Gracious, the Most Merciful

 

Answer:

 

A sale is described as a transaction where both the buyer and seller agree to the exchange (i.e., it is concluded upon mutual consent). One party makes an offer and the offer accepts it. [Al-Bināyah: vol. 7, pg. 8] [1]

 

From what you have explained above, it appears that there are two separate transactions taking place. The first transaction is between yourself (the shopkeeper) and the finance company whereby you have come to an arrangement with them for them to provide finance to your customer at no cost to them and they charge you a fee of 20% for the service that they are providing.

 

Thus, there appears to be no implications of Riba (usury/interest). Riba is strictly prohibited. Thus, any action which goes close to it should be avoiding as a precautionary measure.

 

Allāh Ta’ālā has said, “O you who have believed, fear Allāh and give up what remains (due to you) of interest, if you should be believers. And if you do not, then be informed of a war (against you) from Allāh and His Messenger. But if you repent, you may have your principal – (thus) you do no wrong, nor are you wronged.” [Surah Al-Baqarah; 2:278-279] [2]

 

If the transaction between the customer and the financier is as you describe it to be, then there is no issue there. The financier is providing a loan to the customer for them to repay it instalments over an agreed upon time frame and set amount. This would be the second transaction.

 

Based on the limited information provided above, both transactions appear to be above board.

 

Project Financing using Istisna – istisna is a contract where a party, in this case the shop, undertakes to produce the bathroom requested by the customer at a pre-agreed price, a specific date of delivery, and with specific details pertaining to the work. In project financing, this also involves another agreement made by the shop with the financier. The shop charges the buyer the price it pays to the manufacturer and financier plus a reasonable profit. [Fundamentals of Islamic Banking and Finance: pg. 65] [3]

 

His is also another method which could be utilised.

 

 

Only Allāh Ta’ālā knows best.

Written by Mufti Mohammed Dilwar Hussain

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham

 

 

 

 

[1]قال البيع ينعقد بالإيجاب والقبول إذا كان بلفظ الماضي مثل أن يقول أحدهما بعت والآخر اشتريت

 

[2]يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُواْ ٱتَّقُواْ ٱللَّهَ وَذَرُواْ مَا بَقِيَ مِنَ ٱلرِّبَوٰٓاْ إِن كُنتُم مُّؤۡمِنِينَ. فَإِن لَّمۡ تَفۡعَلُواْ فَأۡذَنُواْ بِحَرۡب مِّنَ ٱللَّهِ وَرَسُولِهِۦۖ وَإِن تُبۡتُمۡ فَلَكُمۡ رُءُوسُ أَمۡوَٰلِكُمۡ لَا تَظۡلِمُونَ وَلَا تُظۡلَمُونَ{.

 

[3] This book has been published by the Chartered Institute of Securities & Investment (2022) and by Bahrain Institute of Banking & Finance (2022). Written by Dr. Shaban Mohamed Barwari