Ustadh Tabraze Azam is asked about receiving start-up funding from a bank that deals in riba.
I am a revert to Islam doing my Bachelor’s in Computer Science and have been given a project in my field of study by a start-up (let’s call it X). X works in the domain of Computer Science. The owner of X is told that if you complete this project, we may get you funds to start your own company.
X is funded by a bank and, Insha Allah, if I am able to complete the project and be able to start my company, which would be of course dealing with Computer Science, then it will also be funded by the same bank dealing in riba.
Is it permissible for me to go for that startup even if my company-to-be will be doing halal work but will be funded by a riba-earning bank?
Jazak Allah khayr for answering.
Yes, it is permitted to accept funding and remuneration from a conventional bank, particularly when it is an institution which isn’t required to follow the dictates of the Sacred Law (shari‘a).
Among the primary sources of capital for a bank is the cash deposited by its customers. Common interest payments or usurious transactions (riba) would normally form only a portion of the money a bank has at its disposal.
Normally, two matters would dictate the permissibility of employment: (a) the line of work itself, and (b) the source of remuneration. When both matters are acceptable, the line of work is deemed lawful.
(Mufti Taqi Usmani, Fiqh al-Buyu‘: 2.1027/1033)
Please also see Bank Employment When is it Permissible? and Is It Permissible to Work on the Projects of a Riba (Usury) Based Bank? and Working for a Company Providing IT Solutions in Un-Islamic Markets.
And Allah Most High knows best.