Is a transaction considered usury if it involves a group of friends agreeing to pool their money equally to give it to one person to start a project, which he then returns after a period to be given to another person?
It is permissible to collect money and lend it to someone who can benefit from it in a permissible project without any increase. This is a benevolent loan (), and its doer is rewarded. It might even be better than charity, as the Prophet, peace and blessings be upon him, said: "There is no Muslim who lends a Muslim a loan twice but that it is like giving charity once." However, if an increase is stipulated in the loan, then it is forbidden usury (riba).
If the lending is done in rotation among the group members, where the money is given to the second person after the first has repaid, there is no harm in that. This is similar to employee cooperative societies (jam'iyyat al-muwazzafin) which many scholars have permitted.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
Read the full answer on Ftawyhttps://ftawy.com/en/questions/29953
Where this answer came from
- Source platform
- Ftawy
- Original fatwa ID
- 29953
- 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