Is it permissible for the institution to re-pyramid the transaction when the beneficiary is late in payment, knowing that the delay causes significant harm to it?
Murabaha institutions faced the problem of some affluent debtors failing to repay on time. They resorted to rescheduling debts by increasing the profit margin in exchange for the delay, which is prohibited usury (riba), just as it was in the pre-Islamic era (Jahiliyyah). Islam commands granting respite to the one in hardship and forbids the wealthy from procrastinating. The Islamic Fiqh Academy in Jeddah issued a resolution prohibiting obligating a defaulting debtor to any increase on the debt, while also prohibiting procrastination by the affluent debtor and disallowing the stipulation of compensation in case of delay in payment.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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- Original fatwa ID
- 38917
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- Text
- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
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- Read the full answer on Ftawy