What is the ruling on bank interest?
Short answer
Agreeing to a stipulated return on a deposit or loan is prohibited riba. Intending to give the interest away to charitable causes does not make the original interest-bearing transaction permissible.
Evidence and explanation
The ruling is based on the stipulated increase being riba, and the source explains that intending to spend it on good causes does not make the underlying riba contract permissible.
Scholar referenced
This editorial summary is based on the original source linked below and is not presented as a verbatim quotation from the scholar.
From the text of the answer (Arabic, with an English translation)
Original answer — Shaykh ‘Abd al-‘Aziz ibn Baz
حكم أخذ الفوائد الربوية وصرفها في وجوه خيرية — فتوى ١٥١٦- Question
«ما حكم أخذ الفوائد من البنوك الربوية، وصرفها في وجوه خيرية؟»
English translation (unreviewed): What is the ruling on taking interest from usurious banks and spending it on charitable causes?
- From the text of the answer
«لا يجوز للمسلم أن يتفق مع البنوك، ومع غيرها على فوائد؛ لأنها ربا، فالذي أودع عندهم مالًا يودعه على أنه ليس له فائدة، بل لحفظه عند المودع، أو ليتصرف فيه المودع، ويعتبره قرضًا عنده، ثم ...على الحساب الجاري يأخذ حاجاته، ولا يأخذ له فوائد، أما الاتفاق معهم على فوائد فلا يجوز، ولو قال: إنه يصرفها في وجوه خيرية، أو المشاريع الخيرية لا يجوز له هذا.»
English translation (unreviewed): It is not permissible for a Muslim to agree with banks or others on interest, because it is riba. Whoever deposits money with them should deposit it on the basis that he gets no interest, but only for safekeeping with the depositary, or so that the depositary may use it and treat it as a loan owed to him; then ... from the current account he takes his needs and takes no interest. As for agreeing with them on interest, that is not permissible, even if he says that he will spend it on charitable causes or charitable projects; this is not permitted for him.
The Arabic excerpts matched the original page word for word by an automated check and have not had human scholarly review. The English translations are unreviewed translations made for this site; they are not an approved Shari‘ah translation. Rely on the Arabic original.
Source
Ruling on taking riba-based interest and spending it on charitable causes
Shaykh ‘Abd al-‘Aziz ibn Baz, may Allah have mercy on him