Sunnah forbids this type of transaction within which profits or returns
pre-specified, as long as the transaction is concluded with mutual consent.
transcendent is He, said: "Oh people of faith, do not devour your
among yourselves unjustly, the exception being trade conducted by
means: Oh people with true faith, it is not permissible for you, and
any of you devour the wealth of another in impermissible ways
usurpation, or usury, and other forbidden means). In contrast, you
exchange benefits through dealings conducted by mutual consent,
no forbidden transaction is thus made permissible or vice versa.
regardless of whether the mutual consent is established verbally, in
or in any other form that indicates mutual agreement and
There is no
doubt that mutual agreement on pre-specified profits is Legally and
permissible, so that each party will know his rights.
It is well
known that banks only pre-specify profits or returns based on
international and domestic markets, and economic conditions in the
addition, returns are customized for each specific transaction type,
Moreover, it is
well known that pre-specified profits vary from time period to
instance, investment certificates initially specified a return of 4%,
subsequently to more than 15%, now returning to near 10%.
that specify those changing rates of returns are required to obey
issued by the relevant government agencies.
pre-specification of profits is beneficial, especially in this age, when
truth and fair dealing have become rampant. Thus, pre-
of profits provides benefits both to the providers of funds, as well
to the banks
that invest those funds.
beneficial to the provider of funds since it allows him to know his rights
uncertainty. Thus, he may arrange the affairs of his life accordingly.
It is also
beneficial to those who manage those banks, since the pre-specification
gives them the incentive for working hard, since they keep all excess
what they promised the provider of funds. This excess profit
justified by their hard work.
It may be said
that banks may lose, thus wondering how they can pre-specify
profits for the
In reply, we
say that if banks lose on one transaction, they win on many others,
can cover losses.