Purchasing a House through Al-Rayyan Bank

As a general principle, the Shari’ah compliancy or otherwise of any ‘Islamic’ home purchasing plan or scheme, offered by the various banks and Islamic finance institutions, depends on whether it adheres fully to Islamic guidelines and methodology as outlined by expert scholars in the field. It also depends on whether the scheme’s updated contracts are reviewed regularly, and the actual implementation of the procedures is audited and executed Islamically. As such, not every product or scheme advertised as being ‘Shari’ah compliant’ actually is, and not every product is Islamically unlawful or dubious.

I frequently receive queries concerning the home purchase plans and schemes offered by the UK based Al-Rayyan Bank (formerly Islamic Bank of Britain, IBB), and my standard response is that I am unfortunately not in a position to comment on their permissibility. The reason is simple: In order to provide a definitive ruling, I would need to thoroughly review their whole step-by-step procedure, contracts, and other details – including documents not normally open to the public. This would need to be ‘constantly’ monitored in order to provide an up-to-date ruling.

This is the reason why Al-Rayyan (and other Islamic financial institutions) has its own Shari’ah advisory board that studies, vets, and constantly monitors the products offered, and subsequently gives their approval.

As such, as a layman customer, you have two options:

1) You make your decision based on your trust or otherwise of the scholars on their Shari’ah board. If after studying the credentials of these scholars and investigating about them, you feel in your heart that they are trustworthy – both in terms of knowledge and integrity – then you may go ahead and avail of the products. If, however, you are not too confident about them, then you should abstain.

2) You make your own informed decision by first undergoing an ‘in-depth’ study of the relevant material on the subject – reading, comprehending, and analyzing – and thereafter seeing whether the institution in question is fully implementing the Islamic guidelines outlined. This is a longer process, but it will allow you to confidently discuss the products at hand, and raise whatever objections/questions you have with the bank. A good starting point would be to thoroughly study Shaykh Mufti Taqi Usmani’s work titled, ‘An Introduction to Islamic Finance’, In sha Allah.

And Allah knows best