Yes. Interest credited to a savings account is riba, whether it is the up to 6.3% a year that Safaricom's M-Shwari page advertises, the interest line on a KCB or Equity statement, or the return on a conventional money market fund. The ruling is not controversial among Sunni or Shia scholars; what matters for a Kenyan reader is the next step. Interest already received must be removed from your wealth and given to the poor without any intention of reward, the account should be moved to a non-interest or Mudarabah structure, and the profit-sharing alternatives, such as Gulf African Bank's Kuza account, the Ziidi Shari'ah fund and Etica's Shariah fund, now publish their rates in the open.
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Why interest on savings is riba and profit from Mudarabah is not
A conventional savings account is a loan from you to the bank. The bank guarantees your capital and promises a fixed or variable return on it. Any guaranteed increase on a loan is riba al-nasi'ah, the form the Quran prohibits by name, and the size of the rate does not change the category. It is irrelevant that the bank uses the money for lawful business; the contract between you and the bank is a loan with a return attached.
A Mudarabah account is an investment partnership. You supply capital, the bank supplies management, and you share whatever profit the pool actually earns in a pre-agreed ratio, with the risk of loss on your capital. Gulf African Bank's Kuza page states exactly this: the customer provides funds, the bank invests them, and profits are shared according to ratios the bank publishes periodically. The profit rate versus interest rate explainer covers the mechanics; the short version is that one is a promised return on a loan and the other is a share of a result.
What to do with interest you have already received
The majority position, adopted by the main contemporary fiqh councils and by the Shariah boards of Islamic banks, is that interest received unintentionally or before you knew the ruling is not yours to keep and not yours to destroy. You dispose of it by giving it to the poor and needy, or to public welfare that benefits the needy, without seeking reward and without counting it as zakat or sadaqah. The money is treated as unlawful wealth being returned to a lawful use, and the giver gains nothing from it except the discharge of a duty.
Some practical rules follow from that. You should not spend it on yourself, your family or your dependants. Most scholars say you should not use it to pay your own taxes, bank charges or fines, because those are your personal liabilities; a minority allows offsetting bank charges against bank interest on the view that it returns the money to its source, and you should follow the scholar you trust. You may give it to a relative who qualifies as poor, because the benefit goes to them, not to you. Keep a simple record: the interest amount per statement, the date you gave it away, and the recipient. On an account where interest has accrued for years, go back as far as the statements allow and add it up.
- Download or request statements for every interest-bearing account, including M-Shwari and Lock Savings, back to the date you first held a balance.
- Add up every line labelled interest, credit interest or interest capitalised, net of the withholding tax deducted alongside it.
- Give the total to a poor or needy person, or to a welfare cause serving the poor, with no intention of reward and without counting it as zakat.
- Record the amount, date and recipient so that next year's reconciliation starts from zero.
- Empty or close the product so that the exercise is not repeated twelve months later.
How to find the interest on a Kenyan statement
On a conventional bank statement the credit usually appears as a monthly or quarterly line labelled interest, credit interest, interest capitalised or similar, often paired with a smaller debit for withholding tax. KRA's withholding tax schedule lists qualifying interest from financial institutions at 15% for residents as a final tax, so the net figure credited is 85% of the gross. For disposal purposes most scholars say you give away the net amount that actually reached you; a stricter view adds back the tax on the ground that the whole gross was riba. Either way the statement gives you the number.
On M-Shwari the interest is credited to the M-Shwari balance rather than to M-PESA, and the Lock Savings account pays its interest monthly or at maturity according to Safaricom's page, so you will see it as separate credits in the M-Shwari mini statement. Add them up across the year. Safaricom's own page also states the loan side: M-Shwari loans are charged at 9%, described as a 7.5% loan fee plus 1.5% excise duty, which is why the M-PESA verdict article treats the wallet as permissible and M-Shwari as not.
How to stop interest being credited
Kenyan conventional banks do not usually offer an opt-out from interest on an ordinary savings account, so the practical route is to move the balance to a product that pays none or to an Islamic window at the same bank. The three large banks with windows, KCB (Sahl), Absa (La Riba) and National Bank (Amanah), will open a non-interest or Mudarabah account for an existing customer, and the fully Islamic banks, Gulf African, DIB Bank Kenya and Premier, will do the same for a new one. Current accounts at conventional banks generally pay no interest, so a current account used for transactions is cleaner than a savings account used for parking cash.
For M-Shwari, the only way to stop the interest is to hold nothing in it. Keep your transactional float in M-PESA itself, which pays nothing, and move savings into the Ziidi Shari'ah money market fund inside the M-PESA menu, managed by GulfCap Investment Bank, or into a bank Mudarabah account. If an employer insists on a particular bank for salary, the account itself is permissible as long as you do not leave a balance in an interest-bearing savings product; a non-interest current account at that bank satisfies both the employer and the ruling.
Where to put the money instead: the printed rates
The halal savings market in Kenya now prints its numbers. Gulf African Bank publishes a monthly Weightages and Profits sheet; the August 2026 sheet shows a declared profit rate of 3.2002% for the KES Kuza savings account (0.5171% on USD), 4.9499% for a twelve-month Mudaraba term deposit between Sh 50,000 and Sh 999,999.99, and higher tiers for larger balances. Kuza requires a Sh 1,000 opening balance, carries no monthly or ledger fee, and only pays profit for a three-month Mudarabah tenure if you keep at least Sh 10,000 throughout and make no more than one withdrawal in the period.
Etica Capital runs a Shariah fund from Sh 100 with daily published profit figures; on the day we checked its products table printed an effective annual profit of 11.64% for the KES Shariah fund, net of fees and gross of withholding tax, while a ticker on the same page showed a lower figure, so treat the number as a moving snapshot rather than a promise. Etica's FAQ also explains that its yields are quoted gross of the 15% withholding tax. The best Islamic savings accounts comparison lines up every bank option; the Islamic fixed deposit versus Shariah fund comparison covers the fund side.
| Situation | What to do |
|---|---|
| Interest already sitting in a conventional savings account | Total it from statements, give the net amount to the poor with no intention of reward, record it |
| Interest on M-Shwari or Lock Savings | Add up the credits in the M-Shwari mini statement, give them away, then empty the M-Shwari balance |
| Employer requires a conventional bank for salary | Keep a non-interest current account there; move savings to a Mudarabah account or Shariah fund |
| Child's account earning interest | Dispose of the interest as the guardian; move the child to a Shariah children's account such as Gulf African's Sasa |
| Inherited account with accumulated interest | Heirs give away the interest portion identifiable from statements; principal is divided as inheritance |
| Want capital protection | Bank Mudarabah accounts are KDIC-covered to Sh 500,000 per depositor per bank; Shariah funds are not |
Deposit protection: what changes when you switch
The Kenya Deposit Insurance Corporation's page states that it covers up to Sh 500,000 per depositor per member institution across current, savings, fixed deposit and call accounts, that multiple accounts at one bank are consolidated into a single claim, and that the protected amount is paid when a bank is placed in liquidation. Gulf African, DIB, Premier and the Islamic windows are all member institutions, so a Mudarabah deposit is protected to the same ceiling as a conventional one. The same KDIC page lists what is not covered: mutual funds including money market funds, unit trusts, SACCO deposits and cryptocurrencies. A Shariah money market fund with Etica or Ziidi is therefore uninsured, as the KDIC and Islamic banking explainer sets out.
That difference should shape the split. Emergency money and anything you cannot afford to lose belongs in a bank Mudarabah account under the Sh 500,000 ceiling; money you are growing can sit in a Shariah fund where the published profit is higher and the liquidity to M-PESA is instant. Both are available through our Islamic bank account comparison and the halal investing hub.
Our view
If you are holding interest today, dispose of it this week: total the statement lines, give the net amount to a poor person or a welfare cause, and keep the record. Do not wait to find a perfect recipient and do not let the sum mix with your own money for another year. Then close or empty the product that generated it.
If you are choosing where savings should live, a salaried reader with an existing KCB, Absa or National Bank relationship should open that bank's Islamic window account and move the savings balance there, keeping only transactional cash in the conventional current account. A reader with no bank relationship should open Gulf African's Kuza for the protected core and add Etica's Shariah fund or Ziidi for the growth layer. A reader who saves only on M-Shwari should move the balance into Ziidi Shari'ah inside the same M-PESA menu and stop using M-Shwari for anything. Facts checked against gulfafricanbank.com, safaricom.co.ke, kdic.go.ke, eticacap.com on 11 September 2026.
Frequently asked questions
Is a high yield savings account haram?
Yes. A higher rate does not change the contract. A savings account that guarantees your capital and pays a return on it is an interest-bearing loan to the bank at any rate, from M-Shwari's advertised up to 6.3% to a promotional rate at a tier-one bank. The halal equivalent is a Mudarabah account or a Shariah money market fund, where the return is a share of actual profit and is not guaranteed.
Can I give interest money to my family?
Only if the family member is genuinely poor or needy and would qualify to receive charity in their own right, and only because the benefit goes to them rather than to you. You cannot use interest to pay for your household, your children's school fees, or your own obligations. Most scholars also say you should not use it to pay your own tax or bank charges, since those are your liabilities.
Is interest on my child's savings account haram?
Yes, and the duty to dispose of it falls on the parent or guardian managing the account. Add up the interest credited, give it to the poor, and move the child to a Shariah-compliant children's account. Gulf African's Sasa children's account appears on the bank's August 2026 profit sheet at the same 3.2002% KES declared rate as Kuza, and the Islamic windows offer children's accounts too.
What if I inherited an account that earned interest?
Separate the two parts. The principal and any lawful profit are part of the estate and are divided among the heirs under the faraid rules. The interest, which the statements will identify, is not estate wealth in the view of most scholars and should be given to the poor by the heirs rather than divided among them. Where old statements are unavailable, estimate conservatively and give away more rather than less.
Does withholding tax on interest reduce what I must give away?
Most scholars say you give away what actually reached you, which is the net after KRA's 15% withholding on qualifying interest from financial institutions. A stricter view adds the tax back and gives the gross amount, reasoning that the whole increase was riba and the tax was your liability. Pick one approach, apply it consistently, and record it. Either way, the principal is yours and is not affected.
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Is the Ziidi Shari'ah fund inside M-PESA really free of interest?
Ziidi has two funds inside the M-PESA menu: a conventional money market fund and a Shari'ah money market fund. Only the second is screened, run by GulfCap Investment Bank under a Shariah supervisory board, and it pays a share of profit rather than interest. Pick the Shari'ah option deliberately when you enrol, because the conventional fund is the default in some flows. The Ziidi guide on this site walks through the selection screens.
