With regard to the Article 692 of the Civil Code, a deposit turns into a loan, and this loan entails an increase. According to Shariah Law, every increase to the loan is usury. Consequently, a legal, legislative financial and banking committee was established to review the aforementioned article and propose amendments aimed at reformulating it to delineate deposits distinctly from loans, thus eliminating any notion of increased interest.
Islamic banks may deal with conventional banks, provided that this occurs in accordance with the Shariah guidelines, which governs the contracts and transactions of Islamic banks. Accordingly, spot exchange operations, Islamic swap, and syndicated financing may be conducted in accordance with Sharia standards. This also applies to the international Murabaha, provided the purpose is to employ the surplus liquidity of Islamic banks rather than financing conventional banks
Conducting bank credit on the date of deposit and freezing the account for a period of five days by the bank does not violate the provisions of Shariah laws. This is because the decision to not enable the receipt of the amount is separate from the exchange contract issued by the regulatory authorities [1], which aims to prevent currency trading with the intention of monopoly. Furthermore, it is not a condition imposed by either of the contracting parties.
[1] The decision has been withdrawn.
Islamic banks must ensure that purchased goods are segregated in a manner that distinguishes them from others within a designated area allocated for the bank, particularly when the nature of the commodity necessitates such segregation (e.g., when the commodity is supplied in standard units). The purpose is to ensure that the bank assumes responsibility for any damage of the commodity before selling it to the client. Inspection reports for purchased commodities must explicitly acknowledge the designated status in accordance with the aforementioned information.
If there is no justification for the sale of foreign currencies to the Islamic bank, the contract must be terminated, and the purchased amount returned to the Central Bank of Syria following the prescribed procedures:
1. The exchange contract, involving the sale of foreign currency by the Central Bank of Syria to the bank, necessitates the acquisition of a binding commitment from the bank in favor of the Central Bank of Syria, as per the approved format by the Supreme Sharia Advisory Board. This commitment remains valid on the condition that if the bank does not sell the foreign currency to its clients, it will sell it to the Central Bank of Syria at the same price. The Central Bank of Syria retains the discretion to avoid binding commitments.
2. If the bank adheres to the condition of the pending binding commitment and sells the foreign currency to the Central Bank of Syria, the obligation will be considered fulfilled. The binding commitment to exchange unilaterally is also permitted by Shariah in accordance with the Shariah standard for currency trading. The execution of this commitment is mandated by the Central Bank of Syria, either through notification to the bank or initiated by the bank itself in accordance with the terms of the exchange contract.
3. In the event that the bank reneges on the binding pending commitment issued by it, the Central Bank of Syria has the right to ask the concerned bank to compensate it for the actual damage. The compensation involves the Central Bank of Syria purchasing the currency from another party, with the concerned bank bearing the price difference
4. There are no objections by Sharia to establishing a redemption price for a commitment, as it is inherent to commitments; without such stipulations, commitments would lack efficacy. However, what is prohibited is a binding commitment resembling a contract for deferred exchange, which would render the commitment invalid in such circumstances.
Giving prizes for current accounts is not permissible because they are loans guaranteed by the bank, and every loan with benefit is usury. What is known as custom is similar to a stipulated condition (the Prophet, peace be upon him, forbade the lender's gift).
As for investment accounts of all types, they represent trusts rather than bank debts (the mudarib or the agent). The bank may offer prizes to account holders, subject to the following terms:
Islamic bank shares may not be traded at a value exceeding their nominal value if the total value of assets and profits falls below 30% of the bank’s total assets.
The Central Bank of Syria may grant facilities to Islamic banks in Syrian pounds in the form of an absolute investment account. This is done provided that a clear distinction is made between financing through the investment deposit method and investment agency, and the terms of profit distribution are clarified
Zakat is paid on the frozen deposit only once, as stipulated in Zakat Standard No. 35 in Paragraph 5/3/4/8 thereof, and the decision of the Islamic Fiqh Academy in its 16th session.
Arbitration is one of the requirements for Islamic banks. The cancellation of arbitration violates one of the Shariah-compliant conditions upon which these banks are obligated to adhere. Arbitration is based on the provisions of Islamic Sharia, while the judiciary judges according to statutory laws. Arbitration is initiated by mutual agreement of both parties involved. In the event of a dispute between them, recourse to the judiciary is pursued. It is noteworthy that arbitration does not preclude utilizing the provisions of the Banking Courts Law.
Approval of the Reciprocal Loan Product must adhere to the following criteria:
A. The product must be named "Interbank Loans."
B. It should be executed through two separate contracts, each without conditions or any interrelation between them.
C- Both parties have an urgent need and for the purposes of hedging exchange rate risks.
Additionally, reciprocal loans between clients and banks are permissible, provided that the primary purpose is to hedge exchange rate risks.
The bank's approval of the price offer submitted by the supplier is not considered a receipt. It is required that the commodity is designated and separated from the rest of the supplier's commodities and that the bank is able to receive it, so that the consequence of the commodity's damage falls on the bank and is included in its guarantee. To transfer the guarantee (the consequence of damage), an inspection is conducted or the supplier notifies to set aside the commodities, and they are identified with a specific mark or placed in a designated area for the bank's benefit. This is required for certain commodities such as furniture. Additionally, the bank must acknowledge receipt before transferring ownership of the commodity to the client.
Islamic banks must not authorize their financing clients to purchase the assets subject to Murabahah and Ijarah. This is except in the case of urgent need that is classified as a necessity and not a need, in order to avoid formality, show the bank’s role in the process, and separate between the bank’s guarantee and the client's guarantee after the sale.
With regard to the Article 692 of the Civil Code, a deposit turns into a loan, and this loan entails an increase. According to Shariah Law, every increase to the loan is usury. Consequently, a legal, legislative financial and banking committee was established to review the aforementioned article and propose amendments aimed at reformulating it to delineate deposits distinctly from loans, thus eliminating any notion of increased interest.
A promise by one of the parties, even if it is binding, is permissible. However, the issue arises with fixing the exchange rate. If the price is determined on the day of execution in the future (the day the contract is executed), it is permissible. However, if the fixed price differs from that price, it is not permissible.
Delay fines for debts are prohibited by Shariah Law. As for criminal penalties for violating the conditions imposed by the Central Bank of Syria on those who violate its supervisory instructions, they are akin to fines with money and are added to the treasury of the Central Bank of Syria. They are permissible by Shariah Law because the regulatory authorities have the right to regulate the transactions between banks and impose penalties on them.
The financing of Islamic banks to conventional banks is not permissible, given that the latter will use the financing amount in an activity prohibited by Shariah Law.
Sharia Law does not object to conducting interbank operations by providing liquidity through one bank purchasing goods and selling them to the other on credit. Subsequently, the owner of these goods sells them at the current price to obtain liquidity. This is provided that the conventional bank benefiting from the liquidity will utilize it for purposes acceptable by Sharia Law, such as "financing state constructions and others", either independently or in cooperation with Islamic banks (syndication). However, if the conventional bank intends to use the liquidity to lend it to its clients with interest, it is not permissible to engage in an interbank transaction for this purpose. On the other hand, if the Islamic bank is the beneficiary of the liquidity, there is no objection to obtaining it through a conventional bank in the aforementioned manner.
Each case must be presented individually to the Sharia Supervisory Board of the bank to decide whether there is infringement or negligence on the part of the mudarib (the bank) or not. If infringement or negligence on the part of the bank is proven, the founders and shareholders shall bear the loss according to their shares. If this is not proven, the joint share shall bear the loss.
