Q&A (Fatwa)

#276: Ruling on Interest (Cooperative)

Question

As salam alaykm warahmatullah wabarakaatu
Please I have a question
I know in Islam interest is not good. But in a case where you have a cooperative organization where you take loan and you are required to pay back with a certain percentage. How can one deal with that. And what is the best thing to do

ANSWER

Wa alaikum salaam Wa Rahmatullah Wa barakatuh,

First you have to understand that the kind of interest that the shariah make haram is a defined form of monetary dealing which can also occur between individuals and it is not restricted to only banks.

Thus, wherever such a monetary deal occurs, the shariah classifies it as riba.

The word riba originates from a root word that means increase or growth.

Allah says; and whatever you pay as interest so that it may increase the wealth of people does not increase in the sight of Allah. Quran 30;39.

And a form of riba which the Arabs were engaged in during jahiliyah was such that they ask for an increase in the original amount borrowed if the borrower is going to delay payment.

Based on what you have described, and what we have said above, we say it is haram for you to engage in such kind if dealing.

The best thing to do is not to engage in such. And we advice you to look for like minds that can agree to form a cooperative which can give out loans to its members based on guidance of the shariah.

And Allah knows best.

Jazaakallahu khairan!
Baarakallahu feekum!

Answered by Abu Hafs

6th Ramadan 1438A.H.

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