01 September 2003, 04 Rajab 1424

Note by Ustaaz, Ahmed Fazel Ebrahim – December 13/2003: The above fatwa does not imply that taking interest from bank A is permissible. Rather it states that in the event of having received interest from bank A, the following applies - a) the interest received must be returned to the source from which it was taken. b) A person can use interest money to pay interest charged by any person or entity, provided that the interest used to pay has been received from the same person or entity. The fatwa neither implies that engaging in the subsequent interest contract with the same bank A is permissible, rather, it means that if a person was subsequently compelled to borrow money or finance something on the basis of interest from the very Bank that he had previously received interest, then to discharge such interest due in the latter transaction with interest received from the same Bank A would be acceptable as a lesser evil than paying such interest due from a person's other halaal funds. The fatwa thus implies that Muslims must return interest that they received to the source from which they had taken it. It is thus not permissible to offset interest charged by any other person or entity with interest received elsewhere.

With modern computer technology and the joint accounting system of banks, it will imply that if a person had received interest in a Johannesburg division of Standard bank, he will be able to use such interest to pay any other interest that he is charged at any other division of Standard bank.

However, although this fatwa expresses a better use of interest then the case where interest received from one source is discharged, in the case of need, to any other source or rather then distributing it to poor non-Muslims, the fatwa does not intend to imply that interest received from bank A must be kept until you are obliged to pay interest to Bank A in another transaction. Since the fatwa says that by returning interest received from bank A to bank A is “not be as sinful as physically receiving and repaying interest,” therefore, the fatwa actually means that it is obligatory for you to return interest received from Bank A to Bank A, without waiting for another transaction where Bank A will obligate you to pay interest on a loan taken by you from it or where you are obligated to pay interest to Bank A for anything that it has financed for you. This ruling follows the primary principle of the shari’ah which states that since interest cannot be received, it must be returned to whoever provided it. Therefore, this ruling is 100% in conformity to the implications of the Qur’an and hadith.