Question:
If one had a money bond and over the years it built up interest, when you went to cash it, is it permissible to use that money towards fixing your home or any of your needs? Or do you have to give away the excess interest the bond gained?
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Bonds are interest-bearing securities that obligate the issuer to pay the holder an interest charge in addition to the principal amount at some given maturity date. It is impermissible to buy, sell and trade in bonds, since they are essentially loans that promise to pay back the face value plus interest, and do not represent the ownership of the holder in anything.
Hence the excess amount received is regarded as usury (riba), and is thus Haraam.
It is not permissible to benefit whatsoever at all from interest. It’s entirety will have to be given away. The procedure for disposing of interest is that it has to be given without having the intention of gaining reward, to the poor, preferably Muslims who are eligible to receive Zakaah.
And Allah Ta’āla Knows Best
Mufti Arshad Ali
Darul Iftaa, Jaamia Madinatul Uloom (Trinidad)
