Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

As Salaam Aleikum wa Rahmatullahi wa Barakatuh

I have a question and hope you could guide me.

 
One of my friends wants to do his daughter's wedding and needs money. He has a land and does not want to sell it as it will appreciate in value in few years time. Now he wants to mortgage his land and get a loan from the bank. Another friend of mine said he can lend the money and will charge  him the inflation rate and another amount as investment gain Eg:

 
Inflation rate 11%

Investment gain 6%

 
Please advice me whether this is correct charging the amounts when lending money.

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Riba transaction

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

If the person lending the money charges a fixed rate of return based on the time the money is lent, without an iota of a doubt, such a transaction would be deemed based on the abomination of ‘riba’ and interest…..and every manifestation of the abomination of ‘riba’ is categorically prohibited to the believers who sincerely believe in Allah and the Last Day.

Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 274-276:

But those who devour ‘riba’ become like the one whom Shaitaan has bewitched and maddened by his touch. They have been condemned to this condition because they say, “Trade is just like ‘riba”, whereas Allah has made trade halaal and ‘riba’ haraam. Henceforth, if one abstains from taking ‘riba’ after receiving this admonition from his Lord, no legal action shall be taken against him regarding the ‘riba’ he had devoured before: his case shall ultimately go to Allah. But if one repeats the same crime even after this, he shall go to Hell, where he shall abide for ever! Allah deprives ‘riba’ of all blessing and develops charity, and Allah does not like an ungrateful, sinful person.

Allah says further in the Holy Quran Chapter 2 Surah Baqarah verse 278:

O Believers!, fear Allah and give up that ‘riba’ which is still due to you, if you are true believers. But if you do not do so, then you are warned of the declaration of war against you by Allah and His Messenger!

Allah says in the Holy Quran Chapter 4 Surah Nisa verse 161:

That they took ‘riba’, although they were forbidden. And that they devoured men’s substance wrongfully. We have prepared for those among them who reject faith a grievous punishment (of Hell Fire)!

Allah Says in the Holy Quran Chapter 3 Surah Ale-Imraan verses 130-132:

130 O ye who believe! Devour not ‘riba’ doubled and multiplied; but fear Allah; that ye may (really) prosper.

131 Fear the Fire which is prepared for those who reject faith.

132 And obey Allah and the Messenger; that ye may obtain mercy.

Allah Says in the Holy Quran Chapter 30 Surah Rome verse 39:

39 That which ye lay out for ‘riba’ through the property of (other) people will have no increase with Allah: but that which ye lay out for charity seeking the Countenance of Allah (will increase): it is these who will get a recompense multiplied.

Allah Says in the Holy Quran Chapter 2 Surah Baqarah verse 276:

276 Allah will deprive ‘riba’ of all blessings, but He will give increase for deeds of charity: for He loveth not creatures ungrateful and wicked.

Al-Tirmidhi Hadith 2829 Narrated by Ali ibn AbuTalib

Ali said he heard Allah's Messenger (saws) invoke the curse of Allah on those who took ‘riba’, those who paid it, those who recorded it, and those who refused to give sadaqah.

Your Question: Please advice me whether this is correct charging the amounts when lending money.
If the money is lent in the way prescribed by you in your text, without an iota of a doubt, it would be transaction based on ‘riba’….and both, the one who lends the money under such conditions and the one who borrows the money both will be involved in the grave sin of ‘riba’ in the Sight of their Lord.

If you friends needs the money and has a land which he believes will appreciate in value in the future, he could come to an agreement to sell a part or percentage of the land to the lender and the two of them could share the profits of the land when the land is actually sold according to their agreed percentage of ownership….such a transaction would be absolutely lawful in the Sight of Shariah.

But to lend money based on a fixed rate of return based on the dimension of time would be a clear manifestation of the abomination of ‘riba’ in the Sight of the Lord.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan