Ruling on premium bonds

Question:

What is the Islamic ruling on premium bonds? If I was to purchase £10 in premium bonds which I can sell back to the government whom I bought them from. I will receive the same amount of money no less or no more, regardless of how long I have kept them for. There’s also a chance that my number could be drawn and I can win an amount. £25 to £1m. Will this be permissible for me?

Answer:

بسم الله الرحمن الرحيم

Firstly it is important to understand what premium bonds are and how they work. Wikipedia describes the premium bonds as follows: 

“A Premium Bond is a lottery bond issued by the United Kingdom government since 1956. At present it is issued by the government’s National Savings and Investments agency. 

The principle behind Premium Bonds is that rather than the stake being gambled, as in a usual lottery, it is the interest on the bonds that is distributed by a lottery. The bonds are entered in a monthly prize draw and the government promises to buy them back, on request, for their original price. 

The government pays interest into the bond fund (1.00% per annum since December 2020) from which a monthly lottery distributes tax-free prizes to bondholders whose numbers are selected randomly.” 

From the above description it is understood that purchasing premium bonds in reality is like depositing money into a savings account except that in premium bonds interest is added to the bonds, then instead of returning each person their interest, it is distributed by a lottery and given to the individual who wins the lottery. Therefore, this money is purely interest and unlawful.

If one does not win any money in the lottery, it will still be impermissible to invest in these bonds with the intention of winning the money. Participating in these bonds is not permissible in any manner.

Allah Almighty states, “Allah has permitted trade and has forbidden interest” (Surah Baqarah, Verse 275)

Abdullah ibn Mas’ud (Allah be pleased with him) said that Allah’s Messenger (ﷺ) cursed the one who accepted interest and the one who paid it. (Sahih Muslim: 1597)

Allah knows best
Syed Hussain ibn Imamuddin
12 Shawwal 1442 / 24 May 2021

Approved by
Mufti Muhammad Tahir Wadee (حفظه الله)
Darul Uloom Bury, UK

References


قال سبحانه وتعالى: وَاَحَلَّ اللّٰهُ الۡبَيۡعَ وَحَرَّمَ الرِّبٰوا (البقرة 275)۔

و عَنْ عَبْدِ اللَّهِ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُؤْكِلَهُ، (رواه مسلم- 1597)۔

عَنْ أَبِي هُرَيْرَةَ، قَالَ قَالَ رَسُولُ اللَّهِ ـ صلى الله عليه وسلم “‏ الرِّبَا سَبْعُونَ حُوبًا أَيْسَرُهَا أَنْ يَنْكِحَ الرَّجُلُ أُمَّهُ ‏” (رواه ابن ماجه- 2274)‏۔

وعن فضالة بن عبيد صاحب النبي صلى الله عليه وسلم أنه قال: ” كل قرض جر منفعة فهو وجه من وجوه الربا” موقوف. (السنن الكبرى للبيهقي-10933- باب كل قرض جر منفعة فهو ربا)۔

وفي الدر المختار: وفي الأشباه كل قرض جر نفعا حرام۔

وقال الكاساني في بدائع الصنائع: (وأما) الذي يرجع إلى نفس القرض: فهو أن لا يكون فيه جر منفعة، فإن كان لم يجز، نحو ما إذا أقرضه دراهم غلة، على أن يرد عليه صحاحا، أو أقرضه وشرط شرطا له فيه منفعة؛ لما روي عن رسول الله – صلى الله عليه وسلم – أنه «نهى عن قرض جر نفعا» ؛ ولأن الزيادة المشروطة تشبه الربا؛ لأنها فضل لا يقابله عوض، والتحرز عن حقيقة الربا، وعن شبهة الربا واجب هذا إذا كانت الزيادة مشروطة في القرض۔

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