Assalaamu alaykum wa rahmatullaah. I would like to ask regarding paying zakah on the money that a person has deposited from his own money in an Islamic bank in order use to use their covered card service. For example, the bank, before offering the covered card (debit card), require from the client to give them 10,000 in cash, and they will keep it with them in a seperate account (seperate from the savings or current account) in order to grant the person the covered card. Upon the 10,000 cash given to the bank, they will set the maximum card limit to 7,500 that can be used. The bank said that this is sharia complaint as the person is using his own money that he has deposited and the bank then deducts the owed money from the person's main bank account. The 10,000 cannot be withdrawn by the person unless he cancels the covered card program and hands them back the card. However, he can withdraw 7,500 from that card, which the bank will deduct 100% from the persons main bank account. I would like to ask: does the person have to pay zakah on that money even though it is not in his full possession ? If yes, then how should he calculate it? And would he have to pay for the past years, during which he did not know that he had to pay the zakah on such financial agreements? May Allaah reward you.

All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad is His slave and Messenger.

You must pay zakah on those ten thousand if they reach the Nisaab (minimum amount liable for zakah) by themselves or in addition to other money or gold or silver or tradable items. The amount of zakah is 2.5%.

If you have not paid zakah on it the previous years, then you should do so now, because zakah is not waived by the fact that its time has passed. Also, the fact that the amount is mortgaged with the bank does not prevent one from the obligation of paying it. Zakah must be paid on the money that is subject to zakah, even if such money is mortgaged. So you should pay zakah on the mortgaged money as long as you have other money to pay from.

Ibn Qudaamah said, “If a person mortgages cattle and a whole lunar year elapses while it is in the hands of a mortgagee, then it is obligatory on the person who mortgaged the cattle to pay the zakah as he is the complete owner, so if he can pay the zakah from other things, then it is an obligation.” 

Also, Ibn Hazm said in Al-Muhalla, “If a person mortgages cattle, gold, silver, land that he cultivated, or palm trees that yielded fruit, and a whole lunar year elapses, then zakah must be paid on all this … because it is property that resulted from his property, and the obligatory zakah is a must on it as long as his property is not transferred to someone else [i.e. as long as he is still its owner].”

An-Nawawi said, “If a person mortgages cattle or other zakah funds and a whole lunar year elapses, then there are two views for this: the adopted view – which is the view authoritatively asserted by the majority of the scholars – is that zakah must be paid on it because of fully owning the property. It was also said that there is a difference of opinion regarding it, like that regarding usurped property, as the person (in this case) is not able to dispose of his property.”

Allah knows best.