Bank loan
Fatwa No: 81502


I am an Arabic citzen. In my counry when you want to build a house, you can ask for a loan from the bank. When you receive the money, you receive an amount less than you requested, but when you want repay the loan, you pay the original amount you requested. For instance, if you apply for a loan of 30,000 dinar, you will receive only 25,000 dinar, but you have to repay the bank 30,000 dinar. The bank says the additional amount is for the employees or the service for the loan. Is this loan considered as riba; is it Harram or Halal?


Praise be to Allaah, the Lord of the Worlds, and blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions. The method adopted by the bank, is illegal in Islam. There is no doubt about that as it is either cheating by claiming the extra cost is for administering the loan (i.e. salaries to workers, staff, etc.) or for other unlawful reasons not clear to the borrower. Both methods are prohibited in the holy Qur'an and in the Sunnah of Prophet Muhammad (Blessings and peace of Allaah be upon him).
Allah knows best.

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