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Benefitting from a loan

Nasihah (Advice): Seeking refuge from debt

 

Sayyidatuna Aaisha Radhiyallahu Anha reports that Rasulullah Sallallahu Alayhi Wasallam often used to seek refuge (with Allah) from debt and sin. It was said to Him: “O Rasulullah (Sallallahu Alayhi Wasallam), how often you seek refuge from debt!” He said: “Whoever gets into debt speaks and lies, and makes a promise and breaks it.” (Nasaai)

 

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Question and Answer:

 

  1. My husband has taken a loan from me for a building project. My husband agreed to pay the amount I loaned to him in instalments after the building project is completed and once it is rented out to the tenants. My husband has asked me to invest as a shareholder in the building project with the same money that he owes me. So, he would take the money that he owes me an invest it for me as a share holder instead of giving the loaned amount to me. Can I do this? Or is this interest?

 

  1. In principle, it is not permissible to derive any benefit from a loan as it amounts to Riba (interest). (Al-Ikhtiyaar Li-Ta’leelil Mukhtaar 2/33)

 

In the enquired situation, you had given the loan to your husband without making a condition of deriving any benefit from the loan by receiving a share in the building project. It was simply a loan given by you to your husband with an agreement of your husband paying back the loaned amount to you without you benefitting from it in any way and thus, the loan was permissible.

 

Therefore, if your husband has given you an option of purchasing a share in the building project as a shareholder now, you may accept his proposal and pay it with the sum of the loaned amount of money that is owed to you.

 

As such, this in not tantamount to Riba (interest) as it was not a condition of giving the loan to your husband to benefit as a shareholder in the building project. It was an option made available to you afterwards. More so, it is a separate transaction altogether and will not effect the validity of the agreement of the loan.

And Allah Ta’ala Knows Best

 

 

Mufti Ebrahim Desai

 

(Islamic rulings on this Q&A newsletter are answered in accordance to the Hanafi Fiqh) 

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