What is the ruling on taking a loan from an institution that charges administrative and banking fees of $3,500 on a construction loan worth $30,000, especially given that Islamic banks impose a very high Murabaha profit margin?
Source: FtawySummary from Ftawy's records · added here Sep 2, 2026
It is permissible for the lender to charge administrative fees on the loan, provided that these fees represent the actual cost of processing the loan, and do not exceed it. Otherwise, it would be considered unlawful usury (riba). This has been stipulated in the resolutions of the Islamic Fiqh Academy, which emphasized that any increase beyond the actual costs of loans is forbidden because it constitutes usury. Therefore, if the additional amount requested by the institution is indeed the actual cost of processing the loan, then there is no objection to taking the loan in that case.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
Read the full answer on Ftawyhttps://ftawy.com/en/questions/18573
Where this answer came from
- Source platform
- Ftawy
- Original fatwa ID
- 18573
- Added here
- . This is when the answer was added to El Fatwa, not the fatwa's date.
- Text
- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
- Read the full ruling
- Read the full answer on Ftawy