Islamic Swap Free Accounts - Part 3
What types of transactions are not allowed?
All business practices, as well as specific investments not adhering to Shari"ah are explicitly forbidden. The payment or assessment of interest, or riga, is expressly not permitted. Speculation, or Maysir, is also forbidden. Transactions should be ethically and morally sound. For example, Islamic Banking unequivocally forbids trade or investment in companies that produce or sell pork or alcohol, and media companies whose publications are contrary to Islamic values, such as those, which are gossip-oriented or pornographic. Islamic Banking transactions must also be rooted in tangible reality; that is, they must not offer a good or service with disproportionate uncertainty.
Why are transactions involving interest not allowed?
The Quran states, "Oh believers, take not doubled and redoubled interest, and fear God so that you may prosper." (Surah Al Imran, 130-1) There are two main kinds of interest, or riba, which are forbidden: Riba al Nasiah is the charging of interest for time allowed to pay back borrowed money. Riba al-Fadl is interest, which is based on the comparative value of two commodities. The Quran offers the clearest reasons for the forbidding of riba:
"That which you give as interest to increase the peoples wealth increases not with God; but that which you give in charity, seeking the goodwill of God, multiplies manifold." (Surah Al Rum, 39)
"Those who benefit from interest shall be raised like those who have been driven to madness by the touch of the devil; this is because they say: "trade is like interest" while God has permitted trade and forbidden interest." (Surah Al Baqarah, 275) "God deprives interest of all blessing but blesses charity." (276) "O believers fear Allah and give up what is still due to you from interest (usury), if you are true believers." (278) "If you do not do so, then take notice of war from Allah and His Messenger. But, if you repent, you can have your principal. Neither should you commit injustice nor should you be subjected to it." (279)
Is it possible to transfer money between Islamic and traditional bank accounts?
Money may be deposited from an Islamic financial institution into a traditional bank account; however, money gained as interest is not allowed to be deposited into an Islamic bank account. Therefore, only money from the principal balance may be transferred to accounts held at Islamic financial institutions.