what later came to be known as the saftajah, a device in which one person handed another a sum of money so that he might refer him to receive an equivalent amount in a different town. The recipient would write the payer a note enabling him to collect the same sum elsewhere. Merchants did this to spare the payer the dangers of the road and for other purposes besides.
The Hanafis and Shafi‘is prohibited this arrangement, regarding it as a loan that yields a benefit. The Hanbalis allowed it, a position supported by Shaykh al-Islam Ibn Taymiyyah, who classified it as a form of ḥawālah, arguing that it contains no shar‘i objection and that, in principle, financial transactions are permissible.
It is related that ‘Abd Allah ibn al-Zubayr (Allah be pleased with him) would take money from a man in Mecca and write him a letter to his brother Mus‘ab in Iraq instructing him to hand over its equivalent.
Today the saftajah has been replaced by the bank transfer. You deposit a sum with a bank in your country, and the bank gives you a cheque that allows you to collect the same amount in another country—or even in the same country. This practice has been approved by the Islamic Fiqh Academies and is followed in all Muslim lands and beyond, whether the currency transferred is the same as, or different from, the currency deposited.
Decision of the Fiqh Council concerning bank transfers:
The Council of the Fiqh Academy affiliated with the Muslim World League, at its eleventh session chaired by Shaykh ʿAbd al-ʿAzīz ibn ʿAbd Allah ibn Bāz and attended by a large body of scholars representing various Muslim countries and schools of legal reasoning, resolved the following:
- Handing over a cheque, once its conditions are met, counts as taking possession in the case of exchanging money by bank transfer.
- A ledger entry in the bank’s books is deemed equivalent to possession for anyone wishing to exchange one currency for another, whether the exchange involves cash the person gives the bank or funds already on deposit.