FAQ #35: What should I do with haram money such as bank interest?

Understanding Money in Islam #

Original question: “Assalamu’alaikum all. Just wanna ask regarding the interest received in our bank account. What can I do with it to dispose? Can I just donate it anywhere or only for certain donations etc?”

In Islam, engaging in transactions involving interest is widely recognized as unlawful and one of the gravest sins. Allah SWT makes this stance clear in the Quran (Surah al-Baqarah, verse 279), equating indulging in riba (usury or interest) to waging war against Him and His Messenger. Prophet Muhammad SAW also emphasized this point, condemning those involved in usury, including those who accept, pay, record, or witness such transactions (Sunan Kubra an-Nasa’i, hadith no. 9336).

However, should a Muslim inadvertently transgress this sinful boundary, Shariah provides a clear path to repentance and rectification through material and spiritual purification, known as “Taubat Nasuha.” It involves sincere remorse in the heart, seeking forgiveness (istighfar) with the tongue, abandoning the sinful action with the body, and firmly resolving not to return to it again.

In Islam, purity extends beyond physical cleanliness and encompasses all aspects of a Muslim’s life, including financial matters. Our religion places great importance on ensuring that one’s money and wealth are acquired through lawful means.

When one finds themselves in possession of unlawful property or income, Shariah scholars advise that it should be returned to its rightful owner whenever possible. If the owner has passed away, the individual is obligated to hand it over to the heirs. However, if the owner is untraceable or unidentifiable, the property should be used for beneficial public goods expenses.

Therefore, if unfortunately, a Muslim finds themselves in possession of a substantial amount of interest in their bank account, the followings are specific ways they can take to rectify the situation:

  1. Disposing it to charitable bodies: The interest received can be given to causes that benefit the disadvantaged in the community. You can choose to dispose of the tainted income to a recognized charitable organization that will manage and direct the funds appropriately, giving you peace of mind.
  2. Disposing it to baitulmal: Another option is to give the interest received to an Islamic religious council or baitulmal, like Majlis Ugama Islam Singapura (MUIS). Such funds are typically used for the welfare of the general public. Shariah scholars agree that it is permissible for baitulmal to accept non-compliant income for the greater good. Contributing to baitulmal is a reliable and effective method of purification, supporting the socioeconomic development of the local Muslim community.

All in all, it is crucial to emphasize that the interest received must not be used for personal benefits or consumption, such as paying bills, credit cards, house loans, or buying groceries and other items. Doing so would be gaining personal benefit from unlawful wealth, which is impermissible.

Furthermore, it is essential to note that the interest received should not be used for zakat payment or waqf purposes, as the tainted source of the money renders it impure. Zakat and waqf are acts of worship aimed at purifying the wealth and the heart of the giver, and Shariah dictates that the funds used for these purposes must be obtained through halal means and legitimate sources.

In all matters, Allah SWT knows best, and seeking His guidance and forgiveness is of utmost importance for every Muslim. By following the teachings of Islam and adhering to the principles of purification, one can strive to lead a financially pure and morally upright life.

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