DECISION NO: 19 Salary Promotion Payments By Participation Banks

DECISION OF TKBB ADVISORY BOARD

DECISION DATE : 31.10.2019
DECISION NO : 19
DECISION SUBJECT : Salary Promotion Payments By Participation Banks

REFERENCE

REQUEST DATE : 31.10.2019
REQUEST NO : 63862138-010-E.31
REQUEST SUBJECT : Salary Promotion Payments by Participation Banks
REQUESTOR : TKBB

REQUEST SUMMARY:

It is requested from the Advisory Board to provide opinion on the legitimacy of participation banks’ acting as intermediaries for salary payments and making promotional payments in this framework.

DECISION:

It is permissible for participation banks to mediate the distribution of salaries/wages of employees of institutions operating in areas that do not violate the principles and standards of participation banking and to pay promotion payments to their employees. However, the condition of keeping the salaries in the bank for a certain period of time cannot be put forward between the participation bank and the institution or its employees.

Legitimacy:

Intermediary institutions in salary distribution services seek such intermediary services as they obtain certain advantages. Participation banks can also mediate the salary/wage distribution of organisations operating in the fields that comply with their principles and standards, and make promotional payments to the institution and/or its employees, taking into account the advantages they will obtain. Such payments are regarded as a grant and do not constitute a violation of the principles and standards of participation banking. However, if the contract includes a condition that the salary deposited between the participation bank and the salary-distributing institution or its employees must stay in the bank for a certain period of time, the promotion paid will be the return of the waiting time of the money, thus violating participation banking principles and standards.

Allah knows the best.