Fatwa #192781 June 2011India
Selling Customer Receivables to a Bank
Question
Suppose I have 1 million in Receivables which are outstanding from various customers. The customers have agreed to pay in Installments in 2-3 yrs. Unfortunately 2-3 yrs is a long time and I need the cash immediately. I approach a Bank and the Bank agrees that it is willing to “buy” the Customer Receivables .The Bank says that it will deduct 8% on the Customer Receivables i.e 80,000$ and pay me the rest 9,20,000 $ in cash immediately. In turn I will collect 1 million which is outstanding from customers and pay it back in installments as the customer pay’s in 1-2 yrs time. Is is Halal?
Answer
Assalāmu `alaikum Warahmatullāhi Wabrakatuh,
The issue in reference has two different dealings
a) Debtor owing you $1,000,000.
b) Loan from the Bank
Effectively, The Bank is advancing you a loan of $9,200,000 at 8% interest rate. You will have to repay the Bank $1,000,000. This is a loan with interest.
It does not make a difference if The Bank terms this deal as buying the receivables outstanding. The end result is the same – A loan based on interest.
And Allah Ta'āla Knows Best,
Muftī Ebrahim Desai
Daruliftaa
35 Candella Rd, Durban, South Africa