The Interest on Bank Deposits and its Expenditure for the Propagation of Islam

by Maulana Muhammad Ali

The Light (Pakistan), 1st August 1922 Issue (Vol. 1, No. 16, pp. 1–3)

Maulvi Muhammad Ali has recently written an article in Urdu on the above subject. As it deals with an important question which deeply concerns the welfare of the Muslim community, we give below an English rendering of it for the benefit of our readers.  — Editor, The Light

While inviting the attention of my Muslim brethren to various ways in which they can financially help the cause of the propagation of Islam, I wrote1 that Muslims who deposited money in banks for the sake of safe custody could spend the interest received thereon on such charitable purposes as the preaching of Islam.

Upon this, I have received from various quarters the question as to how interest which is not lawful can be spent on such purposes. In the following lines, I propose to throw more light on this point.

It must be borne in mind that there is a great difference between:

  1. advancing money on interest, and
  2. depositing it in a bank for the “sake of safe custody.”

The first is absolutely unlawful, although some of the Muslims theologians in India have decreed its legality under the plea that India is Darul Harb [a country not under Islamic rule]; yet I think a thing which is unlawful on principle is unlawful even in Darul Harb. I may at the same time add that I do not recognise that India comes under the definition of Darul Harb.

The second case, however, in which money is deposited for the sake of safe custody is quite different, although, the depositor may get something over and above his principal amount. The difference is quite apparent. Such a depositor does not intend to take interest nor does he deposit money with the view of getting interest. And if there is no intention on the part of the creditor to take interest or something over and above his original amount but the debtor at the time of repayment gives of his own accord some amount in addition to the principal amount, it is quite lawful to accept this additional amount, provided it is not pre-fixed. The reports of the Holy Prophet (may peace and blessings of God be upon him) show that he used to pay something in addition to the original amount to his creditor, and this was according to the Quranic principle,

“the reward of goodness is nothing but goodness.”

Neither had the creditor an idea of taking the amount nor was the debtor bound to give it, nor was the amount predetermined.

Now, the money which is deposited in banks for the sake of safe custody resembles the case cited above in one respect and differs from it in another. The resemblance is this: that the depositor who stands here for the creditor does not deposit money with the intention of taking interest, and the difference is that the bank which represents the debtor binds itself to give a fixed sum. If both the creditor and the debtor did not fix any amount to be paid over and above the original deposit, the use of the additional sum (if any) would have been quite lawful. But the difference to which I have alluded above has made the additional amount unlawful for the depositor’s own use, yet there is no harm nor sin in spending it on a charitable purpose, especially the propagation of Islam, for the depositor had no intention of taking interest on his money.

However, if the depositor utilises the interest on his own account, then it cannot be said that he did not intend to take interest, as his action in utilising the interest establishes the fact that the money was not deposited for the sake of safety but for interest.

What distinguishes the interest on bank deposits from the interest on money advanced on usury is the depositor’s intention of not taking interest. He has no intention of taking interest when depositing the money, and if when withdrawing the money he receives an additional sum which he does not utilise personally, he has obeyed the commandment of Allah.

Now, to spend the interest which he has got without any intention on his part for charitable deeds is not against any ordinance of law (Shariah) because such money does not come under the real definition of riba (usury) unless the depositor has the intention taking interest; and such intention can only be proved by his utilising the amount on his own personal account, otherwise such money cannot fall into the category of usury, which is prohibited.

It is sometimes said that people deposit money in banks with a view to get interest. I agree that generally such is the case.  But how can we attribute such a motive to a Muslim who submits to the commandment of Allah and His Apostle and who practically gives proof of the fact that it was not his object to get interest? And it is a fact that there are hundreds and thousands of Muslims of this type.

Sometime ago, I read that the sum representing the interest which the Muslims refused to receive from the Post Office Saving Bank amounted to about three lacs [Rs. 300,000]. It is evident from this that these people deposited the money only with a view of safe custody and did not want to take interest. I think it was a mistake on their part to refuse the interest money which could then have been spent for the welfare of the Muslim community. It was not an insignificant amount for our poor community. And this amount pertains to the Saving Bank of the Post Office only; God knows how much money of the same kind is wasted in other banks in the country. I think just as the refusal of the depositors to accept the amount of interest absolves them of disobedience to the commandment of Allah though they deposited their money in banks, similarly, its expenditure on charitable purposes is enough to establish their innocence. But in the latter case the advantage is that the community can benefit by it.

In case of their not accepting the interest money, it is also possible that the same is utilised on some Christian propaganda. Thus, the wealth of the Muslims which could have been a means to strengthen the cause of the community is perhaps used to weaken it. In these circumstances, I hold that it is better to take and use the money in furthering the cause of Islam than to refuse it.

There is a report from the Holy Prophet [pbuh] which shows that when the verse:

“The Romans are vanquished in a near land, and they, after being vanquished shall overcome within a few years” [The Holy Quran, 30:2-4],

was revealed, Abu Bakr [rta] asserted that the Romans would be overcome within three years, and Ubayy bin Khalif denied it. On this, ten camels were betted on the issue. This was of course done before the verses disallowing gambling were revealed. The matter was reported to the Holy Prophet [pbuh], who told Abu Bakr [rta] that the time limit was incorrect, as the word bida (the original Arabic word in the verse) signified from three years to ten years. Accordingly, the time limit was changed to ten years and the bet was raised to one hundred camels. The prophecy was fulfilled on the day of Badr and Abu Bakr [rta] actually took one hundred camels from Ubayy bin Khalif. There is a report in Tirmizi to the effect that when Abu Bakr [rta] came with these one hundred camels to the Prophet [pbuh], the latter told him to give them in charity, and according to another report, the Prophet [pbuh] said:

“This is unlawful property; give it away as alms.”

This shows that wealth of dubious character may be spent on charitable purposes.

Of course it does not mean that men should go on acquiring wealth by illegitimate means and spend it as alms. The case was only this: The bet was made before gambling was disallowed, but the time of its receipt came after it. The Holy Prophet [pbuh] the property and spent it for the welfare of the Muslims. Had he refused it, the same would have been instrumental to strengthen the cause of the unbelievers.

This shows that in such circumstances one should keep in view the furtherance of the cause of Islam. That is why I have written that in the circumstances when it is not the intention of the depositor to get interest but to keep the money in safe custody, the interest may be accepted and spent for strengthening the cause of Islam, otherwise the same money, instead of being the means of strength to Islam, will be a cause of strength to anti-Islamic movements.

I have already proved that interest on bank deposits falls in the category of usury only in case the depositor intends to get interest or receives it for his own use.

The report referred to above also shows that if one has got some wealth through illegitimate means and he repents for the future, it is lawful to spend that money in the way of Allah.


  1. This appeared as a supplement to The Light, June 1, 1922. Editor, The Light.