Ramadan, Banks and Zakat

Zakat (alms) is from Zakaa, which means, to increase, purify and bless. In the holy month of Ramadan, believers are encouraged to return out of their wealth to the needy and we should dig out the great philosophy behind this practice, which is one of five pillars of Islam.
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I heard that a lot of people take their money out of banks before 1st Ramadan because banks cut certain calculated (Zakat Calculator) amount as Zakat, which looks ambiguous to people, “pata nahi huqdar ko daitay bhi hain kai nahi.” It always annoys me…..why don’t people get satisfied with the Banks when it comes to Zakat, why they say things like this, I mean…come on, can’t we have faith in Banks?. Secondly, other Ramadan related activity that every Lahoree can see is billboards throughout the city of Shaukat Khanum, Sundus Foundation, and banners of Sahara etc. etc. to urge people to give Zatak for their charity organizations/hospitals, well I feel good about that, because I personally know lot of people, who give Zakat to these and many other hospitals/organizations. One of our family friends was looking for the NEEDY, she said, her friend sent her money for Zakat from USA to distribute and she gave some to a hospital and wanted to find some families, who are not on the surface and are unreachable. And believe me, I saw so many people finding Deserving ones every Ramadan, again, a super act and open secret, and one of reasons that how this one month brings all of us closer.

The reason to bring up the issue is what satisfies us?, is it really “the satisfaction” to give Zakat from our own hands or is it just “skepticism to not let Banks do this” job for us?

5 Comments so far

  1. SK (unregistered) on September 15th, 2007 @ 10:46 am

    With reference to your concern about Zakat deduction by banks all across Pakistan, I would like to point out the following things, I would also like to state for the record that I am no authority on Islam and these are just a few things that I have learned from books by reputed scholars of the world:

    1. Zakat is only deducted from PLS/Other savings accounts, not from Current Deposit/Corporate accounts.

    2. The Zakat being deducted on Savings accounts involves money “earned” through a certain inflationary percentage called, Interest (Riba), and Allah has clearly stated that only, Lawful (Halal) earnings are eligible for the deduction of Zakat.

    3. When Banks deduct Zakat, the amount deducted is transferred in Government treasury which in term again, is in the form of a fixed deposit/savings account in – most probably – a State Bank of Pakistan Depository, or in a local/international bank with which the government is an account holder.

    4. These accounts are interest bearing and thus keeping in view the Islamic code of Zakat, the amount is mixed or more often included in earning more interest over the period of time.

    5. According to a group of reputed scholars from different parts of the world, Hospitals, and other charitable organizations are not allowed to collect Zakat, as the use of Zakat is only meant for the sole purpose of helping out Muslims, where as in hospitals, especially in charitable hospitals people of all religions come to seek cure. What one can do is he can give amount other than Zakat to these organizations/hospitals.

    I would like to put a scenario for your understanding:

    “Zakat is due on my end at the end of year on a set amount of wealth that I have kept with me for over a year. I calculate, and hypothetically the zakat comes out to be 200,000 rupees on my entire household. Now I have two options, keeping in view the Islamic rules and regulations

    a. I can either distribute the 200,000 rupees in two to three families, which can only help them over a specified period of time let’s say two to three months and then again they will be on the road, helpless, or

    b. I can seek a deserving person (preferably having a family), and help him start a small business, let’s say a grocery store, a tailor shop, or any other thing of which that a person knows. This on the other hand than the 1st option will prove to be a continuous cycle and probably within the next year or two, he might be able to expand his business and pay Zakat on his own.

    The thing with Zakat is, one have to give the ownership of the money or the business to the needy person, one is not supposed to strike a deal (business venture) that he needs to pay him a monthly rent on that business.

    Once I have helped someone start a business with initial working capital, I am bound by Allah to give him the ownership of that business without any terms and conditions.

    Hope this would help us in managing and distributing our Zakat more effectively during this month, or the next Ramzan.


  2. Faried Nawaz (unregistered) on September 16th, 2007 @ 1:12 am

    If you add a middleman (banks, government departments dealing with zakat, your local friendly neighborhood mosque, hospitals, whatever), some of your money will go to overhead. Direct funding of the poor is almost always going to be the most efficient use of your wealth. However, you are relatively limited in who you can give zakat to directly — you’re unlikely to drive 250 miles out of your way to give zakat to someone in a remote village. The government (and other organizations) have a bigger reach than any individual, and may be able to give your money to more deserving people.

    Having said that, it really irks me to be forced to give zakat to the government (especially in the time of their choosing — Ramadhan). Given the level of corruption in other segments of society, it is naive to believe that anything I give the government as zakat will not be used for other (non-overhead) purposes.

    Since I can’t be bothered to withdraw my funds from the bank before Ramadhan, lately I’ve begun figuring out how much they’ll withdraw, and then giving the same amount to a charity or directly to the poor. Sure, it’s twice as much as I’m supposed to give, but I think I can afford it.


  3. Pretty Simple (unregistered) on September 16th, 2007 @ 8:23 pm

    @SK: Thanx for the explanation…it was awsum.

    @FNawaz: I read this “chosen time” ie month of Ramadan is best time to give zakat, but not a compulsion.


  4. SK (unregistered) on September 17th, 2007 @ 12:02 pm

    @PS: You’re welcome

    @FN: You’re right about giving the money to the NGO’s etc., but I would like to point out one thing and you might disagree with me as it goes against the basic principle:

    1. Although NGO’s have a larger exposure of the needy, but being an individual it feels great for me that I am giving away Zakat to the person who is needy in my opinion.

    2. When you give to an NGO, they might display your name/credentials in public and the element of showoff might arise and keeping in view our state of faith, the true essence of Zakat might be lost. Not doubting the “Neeat” of the person paying Zakat.


  5. Pretty Simple (unregistered) on September 17th, 2007 @ 12:37 pm

    @SK: It is said to showoff sometimes, so other ppl learn from ur good deed. So, its quite flexible and based upon one’s choice.



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