Fatwa No : 84935
Taking Benefit on a Loan

Taking Benefit on a Loan

What do the honorable Muftis say regarding the following issue: Abdullah and Ibrahim jointly purchased a plot for resale. The total price of the plot was 1,450,000 PKR, which they were supposed to pay within 10 months. They have already paid 950,000 PKR. Due to not being able to pay on time, both of them borrowed 500,000 PKR from a third person, Abdul Khaliq, as a loan. However, Abdul Khaliq told them that if they repay the money within two months, then it is fine; otherwise, he will become a partner with them from the beginning in the profit of the plot. Now the plot's value has increased to 1,900,000 PKR. But Abdullah and Ibrahim argued that when they bought the plot, its price was 1,450,000 PKR, and now it is 1,900,000 PKR, so he should not share in the profit from the beginning; rather, he may only take a share in whatever value increases beyond 1,900,000 PKR, not from the original profit. Is Abdul Khaliq’s demand (to take profit from the beginning due to late repayment of the loan) permissible according to Shariah? And if we reject his demand, do we have the right to do so? Please clarify.

الجوابُ حامِدا ًو مُصلیِّا ً

If the details mentioned in the question are truly accurate and without any misstatement, and if Abdul Khaliq had indeed imposed this condition — that if the loan is not repaid within two (2) months, he would become a partner from the beginning in the profit of the plot — then such a condition is not permissible in Shariah. Abdul Khaliq does not become a partner in the profit of the plot by virtue of this condition. He is only entitled to receive back the exact amount he had given as a loan, i.e., 500,000 PKR. Demanding anything in excess of the loan amount is considered profit on a loan, which falls under Riba (interest) and is strictly prohibited in Shariah.

مأخَذُ الفَتوی

كما بدائع الصنائع في ترتيب الشرائع: (وأما) الذي يرجع إلى نفس القرض: فهو أن لا يكون فيه جر منفعة، فإن كان لم يجز، نحو ما إذا أقرضه دراهم غلة، على أن يرد عليه صحاحا، أو أقرضه وشرط شرطا له فيه منفعة؛ لما روي عن رسول الله - صلى الله عليه وسلم - أنه «نهى عن قرض جر نفعا» ؛ ولأن الزيادة المشروطة تشبه الربا؛ لأنها فضل لا يقابله عوض، والتحرز عن حقيقة الربا، وعن شبهة الربا واجب هذا إذا كانت الزيادة مشروطة في القرض اھ (7/ 395)۔