Fatwa #233743 December 2012United Arab Emirates
Al-Hilal Personal Finance Musawamah
Question
Dear Mufti saab, Assalamu-Alaikum,
I want to clarify the following:
AL HILAL BANK based in UAE offering islamic loans as mentioned below:
Al Hilal Bank Personal Finance Musawamah : Musawamah is a general and common kind of sale in which price of the commodity to be traded is bargained between the seller and the buyer. Unlike Murabaha, the seller in Musawamah is not bound by the Sharia'a to disclose the cost incurred and the profit made out of such a transaction. Both the parties may negotiate on the price. Musawamah can be used where the seller is not in a position to ascertain the exact cost of commodities the seller is offering to sell.
My query is whether the above is sharia compliant or not.
Kindly advise. Jazakallah-Khairan.
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Your understanding of “Musawamah” is correct. However, in order for us to issue a ruling regarding “Al-Hilal Personal Finance Musawamah”, kindly submit the following information:
1. Contracts
2. Procedures and processes
3. How is Musawamah used as an Islamic Loan?
4. How does the Financial Institution determine its profit margin?
And Allah Ta’āla Knows Best
Ismail Desai,
Student Darul Iftaa
Durban, South Africa
Checked and Approved by,
Mufti Ebrahim Desai.