Avoid Provident Fund

The provident fund is a kind of an investment fund maintained by the employer (provident fund trustees, which are nominated by the employer, are responsible for provident fund management). Provident fund generates its revenue from the contribution made by employee and employer.

At the end of a given month, a percentage amount (normally 6% of the basic employee’s salary) is deducted from the employee’s pay cheque and the same amount is contributed by the employer. The total of the contribution from all employees is then deposited in a profit generating activity. Here comes the problem, generally this amount is deposited in a bank or other “interest” oriented activity and the interest collected is then distributed equally among all the employee on proportionate basis.

I am not saying that all provident funds are invested in a similar manner BUT one should check with their respective HR/Accounts department to know how their provident fund is generating the profit. If its banks or other interest oriented activities, then please decide based on the following verdict of Allah Almighty:

"Allah decreases interest and increases sadqah"

Interest (usury)‏

"Those who devour usury will not stand except as stands one whom the Satan by his touch has driven to madness. That is because they say, "trade is like usury", but Allah has permitted trade and has forbidden usury" -- (Surah Al-baqarah verse no.275)

"Allah will deprive usury of all blessing, and will give increase for deeds of charity, for he does not love any ungrateful sinner." -- (Surah Al-baqarah verse no.276)

"Oh you who believe! Fear Allah and give up what remains of your demand for usury if you are indeed believers." -- (Surah Al-baqarah verse no.278)

Hazrat Jabir radiyallahu anhu has reported that the Messenger of Allah sallallahu alaihe wasallm cursed the devourer of usury, its payer, its scribe and its two witnesses. He also said that they were equal (in sin) -- (Muslim)

Hazrat Abu Hurairah radiyallahu anhu reported that the Messenger of Allah sallallahu alaihe wasallm said : Usury has got seventy divisions. The easiest division of them is a man marrying his mother. -- (Ibn Majah)

Hazrat Abu Hurairah radiyallahu anhu reported that the Messenger of Allah sallallahu alaihe wasallm said: I came across some people in the night in which I was taken to the heavens. Their stomachs were like houses wherein there were serpents, which could be seen from the front of their stomachs. I asked: O Gabriel! Who are these people? He replied these are those who devoured usury. -- (Ahmed, Ibn Majah)

Conclusion:
The summary of the matter is that interest is hazardous and should be abstained from in all manners. If anybody has a case they wish to solve then they should contact a Mufti and present their problem as it is. It’s not worth destroying the eternal life of the hereafter, just so that we may have a few more comforts in a life which can come to an end any moment. If for a moment, we think of worldly benefits alone then the following statement is the final verdict:

"Allah decreases interest and increases sadqah"

Let's all review our daily transactions and try to avoid all such matters which are considered interest/usury.

May ALLAH help us all!