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Machinery As Collateral
If a merchant purchases machinery from a conventional bank and uses it as collateral for the Islamic bank until he finishes paying for it but is unable after a few payments to continue; will it be lawful for the Islamic bank to purchase the machinery from the conventional bank and then resell it to the merchant?
It is lawful for the Islamic bank to purchase the machinery from the conventional bank and then resell it to the merchant. Ideally, however, it is better for the Islamic bank to refrain from dealing with interest-based banks altogether.

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