What To Do With The Money Taken From Riba' [Interest]
Shaykh Muhammad Nasiruddeen Al-Albaani [رحمه الله] said:
❝There are many questions regarding the taking of Riba' from banks and in relation to this there are two opinions from the scholars, and by this I mean the present day scholars.
From amongst them, there are those who say that you should leave it in the bank, since it is Haraam [prohibited], and there is no difference of opinion that Riba' is Haraam [prohibited], however the difference of opinion is about leaving it in the bank or taking it out, so this is the first point.
If it is said that you can take it, then it is asked, can you benefit from this Riba or not?
The reply has only one answer, that is, he is prohibited from benefitting from the Riba. So what should he do at this point, here there is a difference of opinion, either he should leave it in the bank and this is harmful, and by doing this there is the evil of helping the banks directly by making them richer, thus this money should be withdrawn so the bank cannot benefit from it, nor the bank clerk who works for the bank, rather he should take it and spend it in general public utilities.
It should not be used to benefit any specific Muslim, what I mean is that he should not take this Riba' and give it to a poor person or to poor people, rather he should spend it in general public utilities.
I shall now elaborate with some examples, regarding leasing out this money, then this is not from the important general public Islaamic utilities, rather it is from the point of view of the Dunya and the increase in worldly gain, as Allaah has characterised the Non-Muslims.
For they know the apparent life of this world, for example they plant trees and grass around graves and beautify them with greenery! Why? So that they do not remember death, so that they cannot see the graves, which would remind them of death.
Anyway the general public utilities are for example, repairing a rugged pathway for crossing which might effect the riding beast or the people, so you can spend on this, or a place that needs a bridge which is used for crossing over a river, so a bridge can be built with that money, or a village needs a machine to pump up water, even if the water is used for the animals, so these are public utilities, and so on.
I want to say that this money should not be spent on Masajid because it is obligatory to build the Masajid upon having Taqwa of Allaah and wealth which is Halaal, but I have said before that if you build toilets with this money, that is, you build toilets for the Masjid, then this is from the public utilities.
As for the Masjid itself, which is used for prayer and for worship, then for this cause it is not permissible absolutely.❞
[Silsilaat Hudaa Wa Noor Tape, (No. 759)]