Government financial assistance as a deposit to a bank account
24 Aug 2011 11:38 GMT
 
The Scenerio: If a person opens a savings account to be used for university education and deposits $4,000 per year in a regular bank in Canada, the Canadian Government matches the deposit with an $800 deposit of its own. The question is: Do we consider the $800 deposit by the Canadian Government to be a form of unlawful interest? No doubt, we consider it interest when someone deposits $1000 in a bank and the bank pays 8%. If the government contribution is not a form of interest, then please explain to me the difference between this contribution and the interest added to the account by the bank itself.

Answered by

Sheikh Sâmî al-Mâjid

The government does not receive or take anything from the $4000 dollars deposited by the person, so the money deposited is solely for the bank and what comes from the government is therefore purely a contribution from the government. This means that with respect to the government contribution, there is no usury.

This is because the party that contributes the extra funds to the account (the government) is different than the party that receives the annual deposit of 4000 dollars (the bank).

May Allah guide us all.

Source: Islam Today



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