Is it permissible for an institution to lend a person money to start a project and take a percentage of the project’s profits instead of interest until the loan is repaid? Or, if the loan is for another purpose, is it permissible for the institution to take a percentage of the borrower’s salary or monthly wage instead of interest until the loan is repaid?
A loan that is repaid with an increase stipulated in the contract is considered forbidden usury (riba), which is one of the gravest major sins and one of the seven destructive sins. It incurs a curse and eradicates blessings. The ruling does not change based on the amount of the increase, its duration, or whether it comes from the profit of the capital itself or from other sources. Every increase on the loan amount that is stipulated in the contract is usury, and there is a consensus among scholars on this. If the institution wishes to profit through a permissible means, it should give the money as (profit-sharing partnership) and not as a loan.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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Where this answer came from
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- Ftawy
- Original fatwa ID
- 173648
- 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