Q: We have frequently heard Shaykh `Abdul-`Aziz ibn Baz saying that
are permissible, and that their money is Halal (lawful) and unobjectionable. Is this correct? And Allah knows best. The second question involves Islamic banks which in fact and unfortunately twist the Shari`ah (Islamic law) under the claim of offering Murabahah Sale (sale with an agreed profit margin), whereas they are very different from Murabahah Sale, as these banks conduct the same transactions held by the usurious banks, through which they lend traders having no liquid-money in return for fixed interest, and this is incorrect, to be more precise: this is clear Riba (usury/interest), whereas in Islamic banks, these forms of transactions are held under the title of Murabahah Sale (Part No. 13; Page No. 311) as a trader goes to the bank, without having any liquid money, the bank informs him that they will not lend him money depending only on the fact that it is an Islamic bank, rather, they ask him about the goods, their types, purchase them then sell them back to the trader, on condition that he covers all the costs of this transaction: cargo, insurance, and any other transportation related costs. They take ten percent in return, and this is the form of the transaction by which Islamic banks deal with traders who resort to them to ask for liquid money. I would like to have the answer to this, May Allah reward you with good.
It is permissible to conduct transactions with banks that do not deal with Riba, whereas if they do, it is impermissible to carry out any transaction with them, and they are Non-Islamic Banks.
The form of transaction that you have mentioned between the trader and the bank, under the title of Murabahah Sale, is impermissible, because the purchase of the goods by the bank for the trader is unreal, as this bank is not in need for these goods, rather, its objective is gaining the ten percent profit, and we have warned questioners from that several times before.
May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.