Are prize bonds issued by Pakistani banks a form of gambling, given the possibility of recovering the principal amount and the absence of a guaranteed loss? And is the money given as prizes in these bonds based on usurious interest, in accordance with the hadith, "Every loan that draws a benefit is usury"?

Bonds and investment certificates with an annual or monthly return are Islamically forbidden because they are usurious loans, and Muslims have unanimously agreed on the prohibition of an increase in a loan, and that is called riba (usury).

Similarly, investment certificates with prizes are forbidden because these prizes are in reality usurious interest. Rather, they combine usury with a semblance of gambling, as the client gambles with what he would have received in monthly interest against the possibility of winning a large prize or losing that interest.

Fatwas have been issued by Islamic Fiqh Academies prohibiting bonds and investment certificates of various types, because all of them fall under the category of forbidden usurious loans.