What is the opinion of the scholars of Islam regarding the following matter?
Zaid and Bakr are businessmen. Their method of trade is as follows: Zaid is in need of money for the development of his business so he asks Bakr for some money. Bakr purchases dirhams from the market and sells it to Zaid with profit. The amount will be paid back in installments because this will be more convenient for Zaid. Is this transaction permissible as per Shari’ah? For example: Bakr purchases 4000 dirhams for Rs.1 lakh and then sells it to Zaid for Rs.1.3 Lakh. Zaid happily accepts the dirhams but he also requests from Bakr that he pay him back this money in installments, or at once but after a certain amounts of months. As a result of this agreement, Zaid will return Rs.3000 in monthly investments to pay off Rs.1.3 Lakh back to Bakr until the amount will be paid off in full. Is this transaction permissible as per Shari’ah? The currencies are different but can we sell one for the other with profit on installments? Isn’t rupees and dirhams considered as different type of currencies? What is the ruling with regards to trading one for more of the other? In the above mentioned transaction if instead of dirhams, Bakr could also purchase a car and then sell it to Zaid for Rs.1.3 Lakh on installments, but Zaid’s objective is getting money that he can invest, not purchasing a car. Hence, if he would purchase dirhams instead of a car, it would be easier for him to convert the money than to resell the car. So, what is the ruling of Tafaadhul (i.e. selling one thing for more of the other, whereas both commodities are of the same category) and installments in the case of Dirhams?
According to our conventional opinion, exchanging currencies does not fall under the law of Bai’ Al-Sarf (بیع الصرف). For this reason, it is permissible to exchange currencies of different countries (or as in this case, dirhams for rupees) on installments for more or less than their market rate, on the condition that one currency be received or taken possession of when the transaction is taking place. However, if there is no legal permission to exchange currencies for more or less that their market rate, then it must be avoided. Hence in the mentioned case, it is permissible for Zaid to purchase dirhams on installments for the purpose of developing his business. However, Zaid must receive (i.e. take possession) of the dirhams at the time of the transaction.
And Allah knows best.