Cheque-based gold transactions in Islamic law: An analysis of qabd and contemporary payment practices

Abstract

Muslim scholars have long given serious attention to gold trading transactions in order to prevent riba (usury). With the advancement of financial technology, various payment methods have emerged in commercial practice. This study analyses scholarly opinions regarding the use of cheques as a mode of payment in gold transactions. It further examines how cheque-based payments are categorised under qabd hukmi (constructive possession) or qabd haqiqi (actual possession). Employing a qualitative research methodology, this study finds that the purchase of gold and silver using cheques is permissible, provided that the financial and legal conditions are fulfilled most notably, that sufficient funds are available in the account, thereby rendering the cheque equivalent to a recognised legal tender such as banknotes. No legal distinction is drawn between the use of ordinary cheques, certified cheques, or traveller's cheques in such transactions. Accordingly, gold trading via cheque is considered valid as it satisfies the condition of qabd (receipt/possession), provided that al-Thamaniyyah (monetary function) remains present in gold and silver jewellery. In its absence, the transaction falls under the category of bay' al-'ayn al-halah bi al-thaman al-mu'ajjal (sale of a present commodity for a deferred price). Furthermore, cheque-based gold transactions do not fall under the category of al-sarf (currency exchange), but rather under bay' al-naqd bi al-'urud (exchange of cash for goods).