What is the ruling on the activity of a bank that provides loans and charges fees for its services as a percentage of the borrowed amount before informing the borrower of the loan's value, and what is the ruling on working there?
It is permissible for the lender to charge fees for loan services, provided that these fees do not exceed the actual cost incurred. Any increase beyond the actual services is forbidden because it is usury (riba). For the fees not to exceed the actual cost, they must be a fixed amount that does not increase with the increase in the loan amount or the repayment period. Accordingly, it is not permissible for the bank to make the loan costs a percentage of the borrowed amount, as this leads to an usurious increase. If the bank stipulates a percentage on the loan, this is usury (riba) and it is not permissible to work in it, unless it is an Islamic bank whose transactions are governed by compliance, in which case it is permissible to work in it, away from the forbidden lending field.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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- Original fatwa ID
- 190791
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- Text
- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
- Read the full ruling
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