A Loan That Accrues Any Benefit Outside The Base Amount Is Ribaa

بسم الله الرحمن الرحيم

Allah says:

يَأَيُّها الذين آمنوا اتَّقوا اللهَ و ذَروا ما بقي من الربا إن كنتم مؤمنين ـ فئنْ لَمْ تفعلوا فَأْذنوا بحربٍ من الله و رسوله

“O you who believe! Fear Allah and abandon whatever remains of Ribaa if you are believers. And if you do not, then take notice of the declaration of war from Allah and His Messenger…” [Al-Baqarah: 278-279]

Indeed the scholars past and present have simplified the matter of Ribaa, and have stated that it is of two types. The first being that which pertains to transactions and or bartering, whereas the second pertains to loans. As for the Ribaa connected to loans the scholars have clearly defined what this is and with which it consists.

Sheikh Sulaymaan Ar-Ruhaylee states, “The scholars have consensus that every loan that accrues/accumulates a (additional) benefit/profit is Ribaa.”(1) 

Sheikh Salih Al Fawzan states, “Forbidden upon the lender is the stipulating on the borrower/debtor an addition as it pertains to the (amount of) the loan. Surely the scholars have consensus on whenever the lender stipulates an addition and collects such, has fallen into Ribaa. Thus what the banks perpetrate from loans with interest rates is clear Ribaa, regardless if it be a consumer or development loan, like they have titled them.

Therefore it is not permissible for the lender, whether it be a bank, individual, or company, to collect a stipulated increase to a loan, despite the name this addition has been titled. This is regardless if the increase has been titled gains, interest, donation, lodging, or riding in a car, so long as this addition, or donation, or profit has come by way of stipulation.” (2)  

Thus this brings us to a very important point, that being the additional profit or gain to a loan is not restricted to monetary benefit, on the contrary it is whatsoever is acquired as a benefit or profit that results from the loan/debt. Sheikh Sulaymaan Ar Ruhaylee illustrates and emphasizes this point in a few examples given. He states, “So if a man says to another ‘I will loan you a thousand riyals with the condition that you write in the newspaper what I’ve loaned to you.’ This is Ribaa because he made conditional (for giving the loan) this stipulation in order to be benefited by his name.”(3) 

He also states’ “Ribaa as it pertains to loans is to stipulate an increase along with the loan, regardless if the addition is something tangible. For instance; like money, a house, or a car. The lender says ‘I will loan you a million (dollars, riyals, etc), provided that after a year you give me in return a million plus a car’, or other than that from tangible objects.

It can (also) be in treatment (how one is treated). For example the lender says ‘I will loan you a million and you will pay it back with the condition that you marry me to your sister.’ This is Ribaa in loans, due to him returning the million for that which was given plus this particular benefit. Or He says ‘I loan you a million with the condition that you repay it and lease me the available warehouse space in such in such a place.’ However the cause for the leasing is the loan, thus this is Ribaa in loans because he repays the million along with the lease.”(4)

He also states, “It can be immaterial, like benefiting by way of the esteem/honor of the debtor or by his name. Like if the lender says ‘I’ll loan you a million for a million (in repayment) and so that you can intercede on my behalf with sheikh so and so.”(5)

All of these are examples of debts that have an obvious benefit attached to them, thus it is Ribaa despite the benefit being monetary or otherwise. May Allah bless us with success in understanding these affairs and avoiding them in totality.

Compiled by Najeeb ibn Yusuf Al Anjelesi

1: ضوابط الربا

2: ملخص الفقهي

3: see number 1.

4: Number 1.

5: See number 1.  


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