Is Getting Interest From Lending Money Riba?
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Is Getting Interest From Lending Money Riba?

Questioner

Omar

Reply Date

Sep 23, 2017

Question

As-salamu `alaykum. I have a problem concerning whether or not I am committing riba in lending some money to a friend of mine. I lent $ 100 to a friend of mine. Then I told him that he should pay me back at the end of the month and he agreed that he would pay an interest of $ 30 dollars if he couldn't pay me back on time. The following month, he still pays me $30 dollars because he couldn't pay me back the $ 100. The reason why I charged the interest to which he agreed upon is that so that he would not delay in paying the money and that he would still remember his debt. So, the question is "is my action in charging him an interest of $30 per months to which he willingly agreed upon for borrowing my $100 worth of money deemed as riba? Thank you for your time.

Mufti

Answer


30% Is Getting Interest From Lending Money Riba

Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.  

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

It is clear that the interest you gain from the one you lend this money is considered riba.


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Usury (riba) is strictly forbidden in Islam. Hence it is the duty of every Muslim to closely observe his earnings and to be completely sure that these earnings are fully free from usury.

Riba, mainly, is the interest that one gains from lending money to others.

What you did is, of course, ribaRiba is always consensual and cannot be otherwise. If it is not consensual, it is then theft or robbery!

In Islamic finance practice, they impose a high fine in order to deter the debt from any delay. But this fine is given to charity as any earning by a loan is riba and is in fact taking a part of the property of the other person without any justification, because by lending you transform your property from cash to a debt and the debt, by its own nature, does not increase.

These 30$ that you are getting must be counted toward payment of the 100$.

Allah Almighty knows best.




About Prof. Dr. Monzer Kahf

Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies

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