Q334 :I refer to what you have published in your
column some time ago and I agree that an individual should not receive
profit from lending money to a fellow human being. But I also believe
that a lender should not nete to any harm as a result of helping a
person in need. However, in relation to the question of lending, may I
ask what happens if I lend you an amount of money to buy a television
set. Six months later, you pay me the exact amount of money that I
advanced to you, but by that time, that amount can only buy a loaf of
bread. I contend that it is not the amount of money, but its value that
is of greater importance. I [a non-Muslim] have argued this point with
Muslim friends, and their reaction is simply, “it is the lender’s tough
luck if he loses out on the transaction.” I would be grateful for your
netments.
A334 : I am glad that you are in agreement with me
regarding personal loans between individuals. For a person to draw
monetary benefit out of helping someone in need is rather immoral,
although it is practiced in many societies. When a person gives another
a loan, he is doing him a great favor, for which he stands to earn rich
reward from God. There is a Hadith which states: “It is written on
the door to heaven: A sadaqah (or charitable donation) is rewarded by
ten times its value, while a loan is rewarded eighteen times.” The
Prophet says that he asked Gabriel the Angel about this and Gabriel
told him that it is because a loan answers a very pressing need on the
part of the borrower. Islam lays down a very strict condition on loans
which requires the lender to ask for repayment of his principal only.
No increase or profit should be asked by the lender. However, a
borrower is renetmended to follow the Prophet’s practice and give the
lender more than he received, if that is at all possible. The Prophet
paid loans he had borrowed with an increased amount. That increase is a
gift by the borrower to the lender to indicate his gratitude for the
help he had received. It must be stated very clearly and without any
equivocation, such an increase should be only at the initiative of the
borrower. There should never be any discussion of that between the
lender and borrower. Nor can there be any implicit or tacit agreement
between the two, at the beginning of the transaction, that the lender
should receive more than he has given. We have to differentiate here
between two situations. They are similar in practice because they
involve an advance of money given by one person to another and an
increased repayment by the other after some time. In the first
situation, the increase is stipulated in advance, and the lender pays
out the money knowing that he will receive more. In fact, he may take
that as a business and get an innete from lending money to people. This
is totally forbidden, because it exploits people’s needs. The other
situation is that the money is lent without any expectation on the part
of the lender that he would receive anything over and above the amount
he lent. However, the borrower repays it with an increase in order to
express his gratitude. He is under no obligation to do so, but he puts
it out of his own accord, without any pressure. That is perfectly
permissible. In our modern times, where inflation systematically
erodes the value of money, borrowers should always try to netpensate
lenders for any loss of the value of money they had borrowed from them,
by giving such an extra amount which at least offsets the drop that
results from inflation. Suppose one borrows one thousand dollars from
another for a period of one year. After a year, figures are published
which show that inflation has eroded the dollar value by ten percent.
If the borrower pays the lender back 1100 dollars, then he is actually
paying him the value of his loan. When inflation is very small and the
value of a particular currency drops only marginally, it may not be a
problem with either lender or borrower to repay only the same amount
advanced. However, in cases where there is a severe drop of value in a
particular currency, as happened, for example, in Lebanon during the
civil war, when the Lebanese lira settled at about 1700 for one dollar,
if you had borrowed, say, 10,000 liras for a period of 10 years and
repaid it in the same currency, you would actually have borrowed the
equivalent of $ 4,000, and repaid only six dollars. That is totally
unfair. It is not right to say that this is only the lender’s “tough
luck”. In the case of Lebanon, people with keen sense of religious duty
were happy to discuss the situation with their lenders and netpensate
them for the value of the money they had borrowed from them. In many
cases, a netpromise was sorted out when both parties were happy. We
should remember that in such a situation, both parties are in a
different position. Therefore, a netpromise that ensures for both a
reasonable deal is perfectly acceptable. Fairness is the mark of
Islamic transactions.
Our Dialogue ( Source : Arab News – Jeddah )