The Al-Baraka Islamic Bank charges a ’penalty’ o­n late payment of instalments.

Answer

The ‘penalty’ which Al-Baraka allegedly charges o­n overdue instalments is haraam riba. Interest cannot be legalized by changing its name and calling it penalty. Whether interest is described as penalty, profit, dividend, service fee, etc., it remains haraam riba. We do not know what question Al-Baraka has posed to Mufti Taqi Saheb and in which way the question was adorned nor have we seen the Mufti’s fatwa or opinion. But, even if Mufti Taqi Saheb has issued a ‘fatwa’ of permissibility, it is a grievious blunder and not a fatwa of the Shariah. It will be his personal opinion which has no validity in the Shariah. The modernists who are anti-Taqleed and who have shrugged off the Taqleed of the Math-habs, are quick to hide behind the skirts of liberal-minded scholars like Mufti Taqi Saheb who generally presents his personal opinion o­n contemporary issues. Mufti Taqi Saheb’s opinions are becoming increasingly contradictory of the Shariah. Hence, we cannot attach much importance to what he says. In view of his liberal attitude and quick presentation of opinion we find modernists like Judge Navsa of the MPL committee and modernists attached to banks and similar institutions looking up to him for such “fatwas” which depart from the Shariah and which are widely divergent from Shar’i views which have been reliably transmitted to us from the Akaabireen. There is no doubt in the prohibition of the interest which Al-Baraka charges and which it tries to conceal under subterfuge of the misnomer, ‘penalty’.