Turkish government compensating bank clients if US Dollar depreciates

Question:-

The Turkish government has recently started a scheme in the banking sector wherein it protects the value of your Turkish Lira currency should the Turkish Lira depreciate against the US Dollar, and compensates one for foreign exchange losses. Please advise if the benefits from this scheme are Halaal?

Answer:- 

We understand that the Turkish government is encouraging individuals to convert their US Dollars to Turkish Liras and thereafter, bank their funds at Turkish banking institutes. However, to encourage this move they are promising their clients that, in the event of the Lira depreciating against the Dollar (within the next 12 months), they will reimburse them for any loss.

Let us assume that a person converts $1000 to Liras awarding him 20 000 Liras in return. The 20 000 Lira is then deposited into the Turkish bank for a period of twelve months. If the Dollar gains strength against the Lira during this period by twice the amount, and consequently $1000 is then equivalent to 40 000 Liras, then the Turkish government will payout a total of 40 000 Liras instead of 20 000 Liras, which was the client’s initial investment. The additional 20 000 Liras in this instance will be considered as Riba, hence, in conclusion, any additional amount (over and above the principal investment) will be Haraam.

ALLAH TA’ALA KNOWS BEST!

ANSWERED BY:-

Mufti Mohammed Desai

Date: 11 Muharram 1444 / 10 August 2022