Bank Loans
Fatwa No: 84127

Question

Are banks loans really prohibited by the Quran?

Answer

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

 

If the bank puts the condition to the loan-taker to return the money with a surplus, which is a loan with interest, then all the Muslim scholars agreed that it is forbidden.

However, if the bank gives the borrower a loan without any conditions whatsoever, and without any interest, then this is what is called in Islam “a good loan” and it is permissible as it does not involve what is forbidden. This kind of loan is desirable.

Unfortunately, this kind of loan is not present in today's world banks that use the first mentioned example of loan which is strictly forbidden. Allah Says (what means): {O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.} [Quran 2:278-279]

Allah knows best.

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