As salamu alaikum, My question is regarding one leading shariah compliant bank in qatar offering almost fixed profit rate of three percent (3%) on a high profit savings account. Upon enquiring with their sales/service person they informed me that they try to maintain the profit rate at three percent so as to benefit the customer, even if the whole profit is less they deduct from the banks profit to maintain the three percent profit of the customer. The bank reduces it share in the profit to maintain the customers profit at three percent? My question is whether this is shariah compliant. Hope to hear from you soon. best regards and salam

All perfect praise be to Allaah, the Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.

Savings accounts in Islamic banks are based on a system of Mudhaarabah (profit-sharing), and there is no fault in it as long as it is done according the Islamic conditions and requirements, the most important of which is that the bank does not guarantee capital or profit.

Based upon this, attention must be given to the bank’s conditions made in the contract. If these conditions contain that the bank guarantees that this specified percentage will be the right of the customer to claim, even if no profit was made, then this contract is incorrect. Ibn Qudaamah said in Al-Mughni, quoting Ibn Al-Munthir: “All the scholars we know of unanimously agreed upon the invalidity of profit-sharing if one or both parties stipulate a designated number of dirhams for themselves.”

The Islamic Fiqh Academy agreed with this as mentioned in resolution 5 of the fourth session which reads: "It is not permissible for a circular bond or a profit-sharing warrant to contain a guarantee that the investor is entitled to the capital or to a specific profit or a profit which is a percentage of the capital. If such a condition was made, explicity or implicitly, the guaranteeing condition is null and the investor only deserves a profit equal to the profit made in  a similar deal."

As for the case that the contract is not based upon such a guarantee, since the customer has no right to claim anything if there is no profit, and the bank only donates this percentage, then the contract is essentially valid. This donation is then a gift from the one holding the capital money (the bank) to the profit-sharing customer.

For more benefit, please refer to Fataawa 148103, 91147 and 5160.

Allaah Knows best.