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Investment In Government Saving Schemes And Employers Provident Funds
Aoa sir,
As per my understanding sir Ghamdi have point of view that investment in Govt scheme ( like qomi Bechet) is allowed and return offered by them is acceptable. 1st please confirm my understanding.
1. If above understanding is ok than investment in NBP would also be allowed as bank is 100% owned by state. Whereas interest received from corporate bank is Haram.
2. Second question pertain to GPFund. My GPF is being deducted on monthly basis. I have option to receive interest on it or not. Interest rate is fixed for each year. In case I opt to receive interest , how it could be different from ribba. whereas my employer is giving me by clearing stating that it is being given as interest ,if I want to receive.
If awnser is that ribba is only on loan (kerz) than we are not giving any loan to corporate bank either than why it is harram.
And if awnser is that interest GPF or qomi Bechet is ok based on the fact that we are not exploiting the necessity of borrower than in case of corporate bank we are unaware of the investment portfolio of bank like Incase of Govt scheme.
If interest given by Govt is allowed( GPF & Qomi Bechet ) in any case than where is the concept of ribba on loan.( govt is exempted from implication of Ribba?)
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10 Replies
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Investment In Government Saving Schemes And Employers Provident Funds
updated 3 years, 4 months ago
3 Members
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10
Replies
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For point of view of Ghamidi Sahab on Government Saving Schemes, please refer to:
Regarding interest earned through Bank Savings, please see:
Discussion 32234 • Reply 33115
Regarding pension funds, please see:
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Aoa
Thanks for prompt reply. I could not respond due to non receipt of notification.
Point of view of Ghamdi sb is very clear.
From the discussion/ video I can conclude that that investment in Govt saving schemes should be avoided where there is no financial constraint to investor.
1. Kindly confirm that my understanding is ok, if possible.
2. Whether This rule can be applied to GPFUND scheme for Govt employees as Govt deduct the contribution and pay interest at announced rate at time of retirement of employee .
Thanks & Regards,
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You can go the settings of your phone to make sure that notifications are turned on for Ask Ghamidi.
Government savings schemes should be avoided because they work close to interest based loans that are haram.
Employee retirement funds are not haram. They function on a completely different principle. They constitute a benefit that you receive for your work generally in lieu of pension.
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Thanks for reply and confirmation.
But reply regarding GPF is not based proper reasoning. Extra amount given on the deposited amount in GPF account at specific rate per year cannot be termed as service benefits because:-
1. employer is giving the extra amout by clearly stating it as interest.
2. Employer give option to receive interest or not ( receiving interest is not mandatory for employees)
It was generous of you for quick and positive reply. But I need to know the that if there is any way to get Ghamdi sb view on these questions.
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Interest is a generic term that means many things. What’s prohibited is riba which is the demand of an additional amount on top of the principle in a loan transaction of a consumable item. Retirement funds in general can’t be considered riba because they’re offered as a benefit of employment as opposed to a loan.
In contrast, as explained in the article shared by Umer Qureshi sahab above, government saving schemes are closer to riba because in essence they’re a way for the government to borrow money (loan).
I am very certain of this opinion of Ghamidi sahab, however, if you would like to have a chance to speak with him directly, you can register for the next Ask Ghamidi Live event. The details of this event can be found at:
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Thanks for your reply and suggestion. Such topic cannot be discussed in 30 seconds. It need deliberation. I would request you to obtain comprehensive response, if possible.
In my humble opinion, Interest on GPF is Ribba because :-
1. Employee is demanding extra amount( he can forego the extra amount by opting for interest free GPF)
2. Exploitation may occured in a similar way as in the case of interest on other Govt scheme.
If it is possible , please obtain basis of opinion for declaring interest on GPF is not Ribba( other than that it is given as end service benifit or given by employer)
Regards,
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The basis has been explained above that a retirement fund is not a loan transaction.
Employee is not “demanding” an additional amount, he’s given an option to let go the additional amount. There’s a difference between the two. Furthermore, riba is only in loan transactions, where as a retirement fund is an employee benefit, not a loan.
Exploitation is not in the equation, however, I’m not sure how an employee can exploit an employer by accepting what the employer is giving with his own free will as a benefit for working for him.
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Dear brother, try to understand the question :-
1. If letting go extra amount is different than demanding than why we keep money in current of bank instead of Saving. By keeping our money into current account we actually Forego the extra amount i.e. we are not demanding/ receiving extra amount on our deposits. Where as extra amount from banks is haram. This mean if you don’t forego extra amount , indirectly you are asking for it( through 3rd party, which is bank Incase of accounts).
2.By exploitation, I meant that GPF will be invested or lended to society in the same way as of in the case of Govt investment schemes or corporate banking scheme which will ultimately exploit the society. (Employer , Govt or corporate, will exploit the society same as in the case of individual investment)
Regards,
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The reason for avoiding a savings account is different. Since most conventional banks earn their money through riba, we try not to take any share of it unless there’s a compelling reason. Please refer to the following video for Ghamidi sahab’s comments in this regard:
Discussion 32234 • Reply 33115
The issue with government savings schemes is not in how the money might be used in a society. The problematic issue is that a government savings scheme, in essence, is a loan in which they pay an additional amount on top of the borrowed principle. These should be avoided also unless there’s a compelling reason.
Ghamidi sahab has discussed riba/sood in a lot of detail. You can find those discussions here:
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