Savings Prizes at Sharia Banks: Between Voluntary Grants and Covert Usury

In the last few decades, the sharia banking industry has experienced quite significant growth, both in terms of assets, customers and its influence in the global economic discourse. One of the main challenges that continues to emerge is how to maintain the integrity of sharia principles in business practices that often require innovation and competitiveness. Among the issues that are being highlighted by ulama, economists and sharia financial practitioners is the issue of giving gifts or incentives to savings customers, especially those that are wadiah or which in practice is formed qardh.

This issue seems simple on the surface, but actually contains quite complex fiqh issues. In essence, Islamic banks certainly need a strategy to attract funds from the public. Saving in banks is an important part of promoting financial system stability and fostering economic inclusion. So, it is not surprising that a number of Islamic banks offer prizes, either in the form of cash, goods or lucky draws, to customers who save. The question is whether these gifts are permissible in Islamic law? Does the provision of these incentives not slip into the practice of hidden usury?

To answer this, we have to return to the fiqh structure of the relationship between customers and banks in sharia savings products. In many fiqh literatures and also contemporary fatwas, it is explained that savings funds given by customers to banks, although often referred to as “deposits”, actually do not meet the definition wadiah in full. In practice, the customer allows the bank to use the funds, and the bank guarantees that it will return them, although not in the same form (‘ain) but in equivalent value. So legally, this transaction is more appropriately categorized as qardh, namely a loan. This is confirmed in Fatwa no. 18 Sharia Supervisory Board of Bank Faisal Islami Sudan, which stated:

Because the deposit holders authorize the bank to dispose of their deposit, and the bank guarantees that it will return it to them, they take the same law as lending, and may not assign a benefit to the lender..

It means: “Because the deposit holders have given permission to the bank to use their funds, and the bank guarantees their return, these deposits are considered loans. Therefore, it is not permissible to determine benefits for lenders (customers).”

Thus, in principle, no benefits should be promised to the lender (customer) because it falls into the category usury al-qardhnamely usury arising from loans that are accompanied by conditions of profit. In the rules of jurisprudence it is stated explicitly: Any loan that brings benefits is usury “Every loan that produces benefits is usury.” So if a bank gives incentives or gifts to customers on the basis of savings which are actually loans, and the gift is an explicit or implicit condition in the contract or promotion, then this is not permitted.

However, contemporary ulama also do not close the door to ijtihad that takes into account the reality of needs and benefits. In Fatwa no. 168 of the Kuwait Finance House, it is stated that banks are allowed to give gifts or incentives to savings customers as long as this is done without prior promise, is not fixed or routine, and is not a condition of the contract. It is stated in the text of the fatwa:

He may provide various incentives to deposit holders from time to time.

“Banks are allowed to provide incentives to deposit holders in varying amounts from time to time.” (Source: Sharia Fatwa from Kuwait Finance HouseVolume 2, p. 99)

Furthermore, this is based on the views of some jurists who allow banks to use savings funds as business capital, and because the profits from the business belong to the bank, the bank is free to allocate part of its profits to anyone, including saving customers, as long as there is no prior agreement. This view refers to deep classical texts Hasyiyah Mawahib al-Jalilwhere it says:

Some legal experts allow trading deposits and making a profit for bank depositors

(See: Hasyiyah Mawahib al-Jalil, Volume 5, p. 255)

From this perspective, the gifts given by banks to savings customers are not compensation for loans, but are purely voluntary gifts from the bank as a form of appreciation, and not an obligation. But the boundaries are very clear: the reward must not be promised, must not be the primary motivation for saving, and must not be done in a way that obscures the legal position.

Reflections on conditions in Indonesia become relevant in this context. The practice of giving gifts by Islamic banks in Indonesia is commonly found in various forms of promotion: starting from Umrah prize draw, savings with direct prizesuntil end of year balance bonus. From a marketing perspective, this is certainly legal and effective. But from a sharia perspective, many of these strategies need to be reviewed because quite a few are carried out massively, routinely, and become the main tools of persuasion. This risks changing the intention of the transaction intention to believe or intention to worship become intention of gaining financial gainwhich within certain limits can give rise to a form of usury khafiyy (hidden crotch).

Therefore, Islamic banks in Indonesia and other countries that run an Islamic economic system are required to be more careful and transparent in managing fund collection strategies. If gifts are to be given, they should be done incidentally, not advertised aggressively, and purely from bank policy, without schemes that make it appear as a “return” on savings.

More than that, educating the public about the structure of the contract and the basic principles of muamalat sharia is an important key. Many customers do not understand that savings contracts at sharia banks are not the same contracts as deposits at conventional banks. So, transparency in contracts, understanding of the objectives of sharia (maqashid sharia), as well as strict supervision from the Sharia Supervisory Board are the main instruments to ensure that sharia banks really run on the right track.

Ultimately, the dilemma between sharia compliance and the demands of market competition is unavoidable. However, this does not mean that sharia must be compromised. On the contrary, this challenge must be answered with creativity and careful ijtihad – not only creative from a business perspective, but also observant in seeing areas of possibility in the Shari’a without violating boundaries. Only in that way, sharia banking will continue to grow, be trusted, and remain consistent as a financial alternative that is not only formally halal, but also fair, ethical, and brings blessings.

Also Read: Laws on Buying and Selling Credit According to Islam

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Author: Abil Qasim

Editor: M. Sutan