Author: Dr. Muhammad Zia-ur-Rahman Azmi (رحمه الله)
Selling a Bill of Exchange to a Bank
A bill of exchange (hundi) is a type of credit money that means a person buys goods on credit from a trader, and the trader issues a bill listing the amount and the due date. The buyer signs this bill and affixes a stamp, making it legally binding. The seller (trader) can use this bill as currency if he needs cash urgently. He can present the bill to the bank and receive money in exchange, but the bank deducts some amount from it. This practice is known as “discounting the bill.”
Selling a bill of exchange to a bank in exchange for a profit (discount) that the seller receives from the bank for the money the bank pays to him, and then the bank collects the amount from the goods purchaser according to the bill—this is clearly interest (riba) and therefore prohibited.
[اللجنة الدائمة: 16576]
Selling a Bill of Exchange to a Bank
A bill of exchange (hundi) is a type of credit money that means a person buys goods on credit from a trader, and the trader issues a bill listing the amount and the due date. The buyer signs this bill and affixes a stamp, making it legally binding. The seller (trader) can use this bill as currency if he needs cash urgently. He can present the bill to the bank and receive money in exchange, but the bank deducts some amount from it. This practice is known as “discounting the bill.”
Selling a bill of exchange to a bank in exchange for a profit (discount) that the seller receives from the bank for the money the bank pays to him, and then the bank collects the amount from the goods purchaser according to the bill—this is clearly interest (riba) and therefore prohibited.
[اللجنة الدائمة: 16576]
