Usury edict casts shadow over top Saudi bank’s IPO

The Permanent Committee Tasked with Issuing Fatwas has officially prohibited Muslims from buying shares in any financial institutions dealing in usury, which includes Sunday’s initial public offering (IPO) planned by the National Commercial Bank (NCB).
The fatwa, or Islamic edict, was issued by committee members led by Grand Mufti Sheikh Abdul Aziz Al-Asheikh, including Sheikh Ahmed bin Ali Sair Al-Mubarki, Sheikh Salih bin Fawzan Al-Fawzan, Sheikh Abdullah bin Mohammed bin Khunain and Sheikh Abdullah bin Mohammed Al-Mutlaq.
The committee earlier received and reviewed an inquiry submitted by Fahd bin Sulaiman Al-Qadi, addressed to the grand mufti, which said that the NCB dealt openly with the proceeds of usury, the statement said. The committee then decided it was prohibited to buy shares in companies dealing in usury. It was a sin and transgression according to the Qur’an and Sunnah of Prophet Muhammad (peace be upon him). There was also consensus among the nation’s scholars on the matter, the statement said.
The NCB IPO is expected to be one of the largest in the world this year. “It will be very, very highly watched,” Beshr Bakheet of the privately held Osool and Bakheet Investment Company was quoted as saying by AFP.
Earlier, Al-Mutlaq, a member of the Kingdom’s Council of Senior Scholars, said on TV that the IPO is haram, or forbidden under Islamic tenets which ban usury.
“What is clear to me now is that it is not permissible,” he said, adding that many of the bank’s investments were already haram.
After a lively public debate over the moral legitimacy of the share offer, the amount of subscriber interest in the IPO would be key, Bakheet told AFP.
The NCB’s Shariah advisory council issued a statement on Thursday in which it stated that “after much thought and deliberations regarding the issue, the bank considers the IPO in the bank’s stock to be permissible according to Shariah.”