Haram or Halal FAQs
Is X Halal or Haram FAQs
The following are a series of FAQs on a variety of topics – primarily focusing around what is haram or halal to work in as a career and whether certain financial products are permissible or not.
Our view is that market order are fine – as the range is determined. Where it isn’t determined – the brokers have a duty to come back to you if its something way off what you wanted to sell for under regs they are bound by anyway.
Finally, one can model it as an agency agreement where you give them complete discretion to sell your shares at the best price they get.
We are comfortable with paying those fees and view them as administrative fees as opposed to interest. Interest is usually significantly more than the fees they charge so there is a reason for the distinction between fees and interest.
However if there is not distinction and the contract is is just window-dressing a straightforward loan agreement then it wouldn’t be. We have no reason to suppose the majority of balance transfer credit cards are doing this, so would be comfortable with them unless proven otherwise.
We do not have a phone helpline at this stage. You can however email us via our contact us page.
I’m currently in Year 13 and I’m in the process of applying for a 4 year degree apprenticeship with JPM. What appeals to me is the fact the bank will fund the 4 year degree in finance. I believe the work experience and future job opportunity will revolve around middle office functions such as cash management, anti money laundering, KYC, trade support and accounting.
They’ve emphasised that movement between roles is very open and encouraged, my long term aim will be to work with their Islamic structuring and banking services. I understand this is may be very exclusive so I will seek to work in roles that don’t involve bonds such as M & A and equity.
My question is if you could shed some light on the permissibility of: the Degree Apprenticeship Scheme, Investment Banking Middle Office job and working in non interested based front office roles such as M & A and equity research.
I would avoid. Our view has always been that working within an investment bank at whatever function, front office or back office, support or fee-earning, is best avoided. If you can find an equivalent apprenticeship with a corporate that is not an investment bank, that would be much more preferable. You don’t want to set off on your career on the back foot. You want barakah in your career from the start.
Halalah is a digital payments platform targeting Consumers & Merchants to create an Ecosystem that will support growth of SME’s via providing them with new digital tools to accept payments, control cash and monitor sales analytics. Halalah Company is licensed by Saudi Monetary Arabian Agency (SAMA) in Saudi Arabia & Abu Dhabi Global Market (ADGM) in UAE. https://www.halalah.sa/en
My understanding of Halalah is that they are the Middle Eastern equivalent of Revolut or Transferwise. Fundamentally remittance and helping people transact is permissible and I see no indication that what Halalah are doing right now is impermissible.
However, see our article on digital challenger bank models here. It might be that Halalah do at some point in the future start making significant money from haram third-party provisions in their app marketplace (e.g. by allowing users access to haram financing). They may also start holding customer assets like a bank and using that as a basis for starting a lending operation. Both of these developments would mean that Halalah starts becoming impermissible to work for (its a sliding scale – the more of that stuff they do, the more I would not want to work for them…but if they’re only doing like 1% of that and its not core to their business, I would get comfortable with it).
So right now, probably fine to work for them, but keep an eye on what their long-term strategy is.
If the M&A team is based within an investment bank then my view is that is not permissible as you are then part of an overall institution that is fundamentally doing a whole bunch of things that are not sharia-compliant.
If the M&A team is part of an advisory boutique such as Lazards or Pirella Weinberg, I would be comfortable with that.
As stated in other FAQs, whether you are assisting the client with an analysis around debt projections etc. is of itself not impermissible. However, if you can guide your career towards sectors where cash buyouts are more likely, that’s helpful. Or, if your team is set up around functions, if you can guide your career to work in the function that puts the deal together and does the initial research rather than the team that sorts out the financing model, that would be much better. From conversations with friends in investment banking, this is generally somewhat possible. See also this guest article from an investment banker.
For companies that sell fundamentally halal products like shell, Pepsi, etc,…. These companies are highly leveraged, for instance d/E ratio for fmcg companies is 4. Isn’t the same hadith of the prophet “the receiver, payer, witness” fall under employees who work in these companies across different functions? For instance the salesman, marketing, operations, like the salesman in Pepsi, cannot sell that much quantity of Pepsi at that price point, which allows to sell to customers with net 60 payments terms, and all of that is happening because of the huge debt that the company has. The point being all employees in Pepsi are witnesses, of the debt the company has. And what about the cfo of the company who knows, sees and sign everything related to interest payments.
The same point (referenced in other career FAQs) about creating intolerable difficulty for ourselves applies. If you adopt this approach you will restrict the job pool for Muslims to a much much smaller pool and most public sector employers will also be ruled out. Pepsi is fundamentally a halal business. Yes if it leverages that is not permissible, but you as an employee are not directly linked to that. Pepsi could of course have taken out a halal loan – so they could well have sold the same amount of coke in a halal context too. Now I personally would not want to work as a CFO or finance department employee for such a company however, as that would likely bring in play the prohibition on witnessing and entering into interest-based transactions.
On the buy side, there are a few PE companies that are evergreen and buy equities in a company with equity. So if I work in such a PE firm, when I’m working with the executives of this company on how much loan to get and on which interest rate and and, how can this be purely halal? Don’t you think this enters a Grey area?
I agree that even as advisory only you should try to specialise in a field that is not advising haram activities as much as you can. That is possible. If your conscience is upset with something that is usually a good sign. However, the general principle still applies: advisory-only services, even to a non-sharia-compliant business, are at heart permissible. Not holding this principle would lead to an intolerably difficult job market for Muslims.
On the sell side, you talk about working with an advisory boutique such as Lazard as halal.My question to you is based on the hadith, of the prophet “the receiver, the payer, the witness” isn’t the person who is creating these valuation models, discounted cash flow,etc… that person is building the entire models, based on Interest rate and is going a step further and recommending which bank to finance this merger or acquisition. Based on the hadith, how can this be halal? Do you consider this is entering a Grey area? Also, some M&A acquisitions happen with companies which are fundamentally non halal, what does a person do in that case? How can a person work in London or Paris, and be an associate and climp up the ladder, with a huge possibility of facing these issues?
The approach I have adopted is that an advisory-only service (regardless of whether the underlying business is permissible or not) is permissible. If you want to be very cautious, you may wish to avoid even that. But my view is that this would make life intolerably hard.
Check out this video here.
In our view the eToro Islamic account (and any other forex Islamic account) is not properly Islamic.
We would strongly advise against getting into forex for Muslims, but also for non-Muslims due to the deep risks attached to it.
The operators of these companies don’t fully understand what Islamic law says about forex and are just trying to put a veneer of Islam over their products.
Forex is at heart a financial instrument (as opposed to dealing in the currency itself) and for it to be worthwhile there is leverage involved.
Most people who engage in forex lose money – and they lose it to people like eToro who can make money off losing trades.
We have considered this topic in great detail here. In short we adopt the minority position that life insurance is often permissible.
We have covered this topic in great detail here. In short, we take the minority opinion that insurance can often be permissible in many cases.
Premium bonds are not permissible. The earnings they offer are derived from interest and the whole set-up is to allow the issuer of the premium bonds to access cheap finance (at the premium bondholders’ expense).