Ruling on “reverse tawarruq” or “reverse muraabahah”
Question

                What is the ruling on reverse tawarruq that is offered by some banks?.
Praise be to Allah.
    What is meant by “reverse tawarruq”, which is also called 
    “reverse muraabahah” is that the customer appoints the bank to buy a 
    specific product and he gives the price of it to the bank in cash, then the 
    bank buys this product from the customer for a deferred payment, with a 
    profit agreed upon with the customer. 

    This transaction is haraam, and it is no different than the 
    planned tawarruq that is offered by the bank, except that the roles of the 
    customer and bank are reversed. The basic principle is that the customer is 
    the purchaser and the bank is the seller, but in this case that is reversed, 
    which is why they call it reverse tawarruq. In the answer to question no.
    82612 and
    98124 we have stated that planned 
    tawarruq is haraam, and the shar’i reservations concerning it. 

    There has been issued a statement of the Islamic Fiqh Council 
    that the kind of transaction mentioned in the question is haraam. This 
    statement reads as follows: 
alone, and blessings and peace be upon 
    the one after whom there is no Prophet, our Prophet Muhammad, and upon his 
    family and companions. 
    
    The Islamic Fiqh Council of the Muslim World League, in its 
    nineteenth session, held in Makkah al-Mukarramah between 22-27 Shawwaal 1428 
    AH (3-8 November 2007 CE) examined the subject “products offering an 
    alternative to depositing for a certain length of time” which are offered by 
    some banks at present under several names, such as reverse muraabahah, 
    reverse tawarruq, direct investment, investing by muraabahah and other names 
    which have been invented or may be invented. The most common form of this 
    product is as follows: 

    1.The customer appoints the bank 
    to buy a certain product, and the customer hands over to the bank the price 
    of the product straight away.

    2.Then the bank buys the product 
    from the customer for a price to be paid at a later date, with a profit 
    margin as agreed.

    After listening to the comprehensive discussion on this 
    topic, the Council determined that this transaction is not permissible, for 
    the following reasons: 

    1.This transaction is similar to 
    the ‘eenah transaction which is haraam according to sharee’ah, in that the 
    purchased product is not sought in and of itself, so it cannot come under 
    the ruling on that type of product, especially since the bank is committed 
    to buying this product from the customer.

    2.This transaction comes under 
    the heading of planned tawarruq. The Council has previously stated that 
    planned tawarruq is haraam, in its second statement in its seventeenth 
    session. The reason why planned tawarruq is forbidden is also present in 
    this transaction.

    3.This transaction is contrary to 
    the purpose of the Islamic way of financing, which is based on connecting 
    finance to real activities which support economic growth and prosperity.

    The Council appreciates the efforts of Islamic banks to 
    protect the ummah from the problem of riba, and it emphasizes the importance 
    of proper application of Islamically-acceptable transactions and avoidance 
    of dubious or superficial transactions which lead to haraam riba. Hence it 
    recommends the following: 

    1.Banks and financial 
    institutions should avoid riba in all forms, in obedience to the command of 
    Allaah (interpretation of the meaning): “O you who 
    believe! Fear Allaah and give up what remains (due to you) from Ribaa (from 
    now onward) if you are (really) believers” [al-Baqarah 2:278].

    2.The role of fiqh councils and 
    independent academic bodies in correcting and guiding the course of Islamic 
    banks should be affirmed, so as to achieve the aims and goals of the Islamic 
    economy.

    3.A supreme committee should be 
    set up in the central banks of all Muslim countries, independent of the 
    commercial banks, composed of Islamic scholars and financial experts, to act 
    as a reference point for Islamic banks and to ensure that their work is in 
    accordance with Islamic sharee’ah.

    And Allaah is the Source of strength. May Allaah send 
    blessings and peace upon our Prophet Muhammad and his family and companions. 
    End quote. 


    http://www.themwl.org/Fatwa/default.aspx?d=1&cidi=166&l=AR&cid=10

    And Allaah knows best.