Ruling on “reverse tawarruq” or “reverse muraabahah”

What is meant by “reverse tawarruq”, which is also called
“reverse muraabahah” is that the customer appoints the bank to buy a
specific product and he gives the price of it to the bank in cash, then the
bank buys this product from the customer for a deferred payment, with a
profit agreed upon with the customer. 

This transaction is haraam, and it is no different than the
planned tawarruq that is offered by the bank, except that the roles of the
customer and bank are reversed. The basic principle is that the customer is
the purchaser and the bank is the seller, but in this case that is reversed,
which is why they call it reverse tawarruq. In the answer to question no.
82612 and
98124 we have stated that planned
tawarruq is haraam, and the shar’i reservations concerning it. 

There has been issued a statement of the Islamic Fiqh Council
that the kind of transaction mentioned in the question is haraam. This
statement reads as follows: 

alone, and blessings and peace be upon
the one after whom there is no Prophet, our Prophet Muhammad, and upon his
family and companions. 

The Islamic Fiqh Council of the Muslim World League, in its
nineteenth session, held in Makkah al-Mukarramah between 22-27 Shawwaal 1428
AH (3-8 November 2007 CE) examined the subject “products offering an
alternative to depositing for a certain length of time” which are offered by
some banks at present under several names, such as reverse muraabahah,
reverse tawarruq, direct investment, investing by muraabahah and other names
which have been invented or may be invented. The most common form of this
product is as follows: 

1.The customer appoints the bank
to buy a certain product, and the customer hands over to the bank the price
of the product straight away.

2.Then the bank buys the product
from the customer for a price to be paid at a later date, with a profit
margin as agreed.

After listening to the comprehensive discussion on this
topic, the Council determined that this transaction is not permissible, for
the following reasons: 

1.This transaction is similar to
the ‘eenah transaction which is haraam according to sharee’ah, in that the
purchased product is not sought in and of itself, so it cannot come under
the ruling on that type of product, especially since the bank is committed
to buying this product from the customer.

2.This transaction comes under
the heading of planned tawarruq. The Council has previously stated that
planned tawarruq is haraam, in its second statement in its seventeenth
session. The reason why planned tawarruq is forbidden is also present in
this transaction.

3.This transaction is contrary to
the purpose of the Islamic way of financing, which is based on connecting
finance to real activities which support economic growth and prosperity.

The Council appreciates the efforts of Islamic banks to
protect the ummah from the problem of riba, and it emphasizes the importance
of proper application of Islamically-acceptable transactions and avoidance
of dubious or superficial transactions which lead to haraam riba. Hence it
recommends the following: 

1.Banks and financial
institutions should avoid riba in all forms, in obedience to the command of
Allaah (interpretation of the meaning): “O you who
believe! Fear Allaah and give up what remains (due to you) from Ribaa (from
now onward) if you are (really) believers” [al-Baqarah 2:278].

2.The role of fiqh councils and
independent academic bodies in correcting and guiding the course of Islamic
banks should be affirmed, so as to achieve the aims and goals of the Islamic
economy.

3.A supreme committee should be
set up in the central banks of all Muslim countries, independent of the
commercial banks, composed of Islamic scholars and financial experts, to act
as a reference point for Islamic banks and to ensure that their work is in
accordance with Islamic sharee’ah.

And Allaah is the Source of strength. May Allaah send
blessings and peace upon our Prophet Muhammad and his family and companions.
End quote. 

http://www.themwl.org/Fatwa/default.aspx?d=1&cidi=166&l=AR&cid=10

And Allaah knows best.