What is the Sharia ruling on Al Rajhi's financing that settles a previous loan in cooperation with an external company, with the remaining amount being received, knowing that this structure is under the supervision of the Sharia Committee?

The answer summarizes the ruling on taking out new financing to pay off a previous loan, detailing it according to the source of the previous loan:

1. If the previous loan was from an entity other than Al Rajhi Bank: It is permissible to take out project financing from Al Rajhi to pay off the previous debt, such as through Tawarruq by buying a real commodity and selling it to obtain cash, but not organized Tawarruq. 2. If the previous loan was from Al Rajhi Bank itself: It is not permissible to take out new financing if there is an agreement or collusion to pay off the first debt with it, even if through the mediation of a third party arranged by Al Rajhi, because this is considered "prohibited debt rollover" (qalb al-dayn al-muharram) or "debt for debt cancellation" (faskh al-dayn fi al-dayn), which leads to an increase in debt in exchange for deferment, and this is prohibited by Sharia.

New financing is permissible if it is completely independent of the previous financing, without the condition of settling the first debt with it.