Question:
A person from Saudi Arabia participates in a savings scheme in STC Bank. The scheme works like this: You deposit 10,000 riyals over four months (2,500 per month). You cannot withdraw during those four months. After four months, your 10,000 is returned. Then prizes are given by lottery. Only those who did not withdraw are eligible. Sometimes prizes include 10,000 riyals, 20,000 riyals, even one million riyals. Is it permissible to accept such prize money?
Answer:
If there is no element of interest (Riba), lottery-type prize distribution is permissible. For example, a shop gives coupons to customers who buy clothes. At month-end, they draw lots and give prizes like sewing machines, refrigerators, etc. That is permissible because the customer’s money is not being held as a loan.
But in this bank scheme, your 10,000 riyals are held by the bank. Thousands of people deposit. That money sits with the bank. The bank can invest it in interest-based ventures. The lottery prizes are given because your money is with them.
The root issue is this: If profit is given because your money is with them, that is Riba. Riba means gaining benefit because your money is in someone else’s possession. In the shop example, you bought goods. Transaction is over. No money is being held. The prize is promotional.
In the bank case, your deposit is the cause of the prize eligibility. That makes it connected to Riba-based activity. Therefore, this scheme should not be joined.
You could simply save 2,000 riyals at home. There is no need to place it in such a scheme.