Doing Business with Banks
To lend a bank money or borrow from it on the condition of a payment of a fixed annual or monthly percentage rate of interest, say 2% or more or less, is a form of prohibited Riba.
Hasan Abdullah Amin has quoted in his book “Bank Deposits and Investments in Islam”: The interest, then, is nothing else but a stipulated excess on a loan to the benefit of the depositor in the case of savings accounts or interest bearing checking accounts, although it is not considered a valid loan in Islam (because the borrower (the bank) is not given a fixed date to repay the loan, it must be ready to pay up upon the depositor’s demand at any time) likewise when someone borrows money from the bank, they must pay a stipulated percentage of interest on the loan. All of this is, without the slightest doubt, Riba. In fact it is one of the two forms of Riba which was practiced by the pre-Islamic period, which the Qur’an prohibited decisively in the Statement of Allah (SWT):
“…whereas Allah has permitted trading and forbidden Riba (usuary)…” (V. 2: 275)