Usage of interest funds
Category:
Business Dealings & Money Matters
According to Madhhab:
Hanafi
Reference:
1440-227
Question:
I am an accountant
and work for a government entity in the Western Cape province called
CapeNature. Our core function is to conserve nature in the province which also
includes generating income from nature based tourism as well as fighting
wildfires as and when they occur on state land within the province.
Over the past few years due to a combination of poor planning, legislative red
tape combined with better expenditure management and better than expected
income generated the entity has managed to increase its bank balances
substantially, however this has also meant a substantial increase in the
interest income.
During the past two years especially, the intensity of the wildfires in the
southern cape (George/Knysnsa area) has also increased and lasted longer and
has been declared a national disaster. consequently the cost to fight these
fires, rehabilitate the land and ensure more preventative measures are
implemented has increased beyond the available budget allocated.
My question is therefore as a muslim accountant can I give my staff the
instruction to use the additional interest income to cover the additional
expenses related to the fire fighting cost?
These expenses include:
- overtime for the firefighters
- food/rations for the firefighters
- helicopter and aerial fire fighting costs
- payments to contractor fire fighting teams
- payments to small local contractors for clearing of veld to prevent fires
- any other related costs
I know that the general rule for a muslim is that interest should be disposed
off by giving away without any hope of reward to a poor muslim eligible for
zakaat or to a poor non muslim, however in this case the interest is earnt by a
government entity that is responsible to deliver services to the broader public
of which majority are non muslims.
Another possible avenue to utilise this interest is to create a fund to pay the
school fees of deserving employees children - would this be permissible and
would this fund only need to be accessible for non muslim staff?
My problem is that I am concerned that I will come under the curse of Nabi
sallallahu alaihi wa sallam for dealing with interest by giving such
instructions or making such recommendations to the board. The board has
indicated previously that we need to look at ways of using the interest money
and budget for the increased interest that is being earnt and as the accountant
they are looking at me to provide appropriate solutions and recommendations and
I am hesitant as I am uncomfortable to deal with interest and insurance but I
have to follow the instructions of the board.
and work for a government entity in the Western Cape province called
CapeNature. Our core function is to conserve nature in the province which also
includes generating income from nature based tourism as well as fighting
wildfires as and when they occur on state land within the province.
Over the past few years due to a combination of poor planning, legislative red
tape combined with better expenditure management and better than expected
income generated the entity has managed to increase its bank balances
substantially, however this has also meant a substantial increase in the
interest income.
During the past two years especially, the intensity of the wildfires in the
southern cape (George/Knysnsa area) has also increased and lasted longer and
has been declared a national disaster. consequently the cost to fight these
fires, rehabilitate the land and ensure more preventative measures are
implemented has increased beyond the available budget allocated.
My question is therefore as a muslim accountant can I give my staff the
instruction to use the additional interest income to cover the additional
expenses related to the fire fighting cost?
These expenses include:
- overtime for the firefighters
- food/rations for the firefighters
- helicopter and aerial fire fighting costs
- payments to contractor fire fighting teams
- payments to small local contractors for clearing of veld to prevent fires
- any other related costs
I know that the general rule for a muslim is that interest should be disposed
off by giving away without any hope of reward to a poor muslim eligible for
zakaat or to a poor non muslim, however in this case the interest is earnt by a
government entity that is responsible to deliver services to the broader public
of which majority are non muslims.
Another possible avenue to utilise this interest is to create a fund to pay the
school fees of deserving employees children - would this be permissible and
would this fund only need to be accessible for non muslim staff?
My problem is that I am concerned that I will come under the curse of Nabi
sallallahu alaihi wa sallam for dealing with interest by giving such
instructions or making such recommendations to the board. The board has
indicated previously that we need to look at ways of using the interest money
and budget for the increased interest that is being earnt and as the accountant
they are looking at me to provide appropriate solutions and recommendations and
I am hesitant as I am uncomfortable to deal with interest and insurance but I
have to follow the instructions of the board.
Answer:
It is apparent from your query that the interest that you are referring to is interest that the government entity has earned on its account. It is not interest accrued on your personal account. The board members are simply requesting a suggestion as to where these interest funds could be used by them. There is no harm in directing them and advising them how to dispose of the funds in avenues that the government deems beneficial.
The curse mentioned in the Hadith is for those who take interest, pay interest, write the transaction of interest and those that witness the transaction, meaning either they are directly involved in paying or taking Riba or they are assisting others in acquiring an interest bearing loan.
If the government uses the funds in any of the projects mentioned in your query then this could be considered as a gift from the side of the government for that particular project, hence it would be acceptable for you to advise them in channelling their funds in the mentioned avenues.
However, if you still feel uncomfortable due to the fact that the funds being dealt with are interest funds, then it would be a matter of Taqwa on your side not to get involved even in an advisory capacity; which would be highly commendable and you would be deserving of reward, Insha-Allah. In that case, you may request the board members to appoint another accountant that is perhaps working for the company to advise and decide in this particular matter.
And Allah Ta'aala knows best!
ANSWERED BY: Mufti Mohammed Desai
CHECKED AND APPROVED BY: Mufti Muhammed Saeed Motara Saheb D.B
Date: 02 Jumadal Ula 1440 English Date: 09 January 2019