I am working as Project Manager at PPIB-Ministry of Water and Power, Government of Pakistan. All government departments offer loan to employees on concessional rates (KIBOR rates). I am also needing loan for construction of upper portion of my house in Islamabad, which otherwise is very difficult through my salary income. Please note that Government of Pakistan pays salary to employees from the interest earned on its money in the banks, also finances projects in the same mannerbeing executed through private contractors/firms. Please guide me as to whether such loan is right for me or not in light of Shariah and Fiqah.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh
Interest has been severely prohibited in Islam.
Allah (Subhanahu wa Ta’ala) says:
و احل الله البيع و حرم الربوا
Translation: “And Allah has permitted sale and prohibited interest/usury” (Surah Al- Baqarah,275/2)
Allah (Subhanahu wa Ta’ala) says:
فان لم اتقوا الله و ذروا ما بقي من الربوا ان كنتم مؤمنين
تفعلوا فاذنوا بحرب من الله و رسوله
Translation: “Fear Allah and leave out the remains of interest, if you are true believers.If you do not do so, then let it be an announcement of war between Allah and his messenger”(Surah Al-Baqarah, 278-9/2)
Allah (Subhanahu wa Ta’ala) says:
يا ايها اللذين امنوا لا تاكلوا الربوا اضعافا مضافعة
Translation: “Oh you who believe! Do not consume interest compounded over and over” (Surah Aale- Imraan, 130/3)
The Ahadeeth of Rasulullah (Sallallahu alayhi wa sallam) explicitly prohibit interest/usury.
Rasulullah (Sallallahu alayhi wasallam) said:
عن ابي هريرة قال قال رسول الله صلي الله عليه و سلم الذهب بالذهب وزنا بوزن مثلا بمثل و الفضة بالفضة وزنا بوزن مثلا بمثل فمن زاد او استزاد فهو ربوا
Translation:“It is narrated on the authority of Abu Hurayrah (radhiyallahu anhu) that Rasulullah (sallallahu alayhi wasallam) said: Exchange gold for gold on equal weight equivalently and exchange silver for silver on equal weight equivalently, whosoever increases or seeks an increase, then it is usury/interest’’ (Saheeh Muslim, 25/2, Qadeemi Kutub Khana, Karachi)
Rasulullah (sallallahu alayhi wasallam) said:
و عن علي انه سمع رسول الله صلي الله عليه و سلم لعن اكل الربوا و موكله و كاتبه و مانع الصدقة و كان ينهي عن النوح
Translation: “It is reported on the authority of Ali (Radhiyallahu anhu) that he heard Rasulullah (Sallallahu alayhi wasallam) cursed the one who consumes interest, deals in interest, records interest, abstains from paying Zakaat (alms) and he used to prohibit excessive mourning” (Mishkaatul – Masaabeeh, 2829)
Rasulullah (Sallallahu alayhi wasallam) said:
عن عبد الله بن حنظلة غسيل الملاءكة قال قال رسول الله صلي الله عليه و سلم درهم ربا ياكله الرجل و هو يعلم اشد من ستة و ثلاثين زنية
Translation: “It is narrated on the authority of Abdullah Bin Hanzalah that Rasulullah (Sallallahu alayhi wa sallam) said: One dirham of interest/usury which a man consumes while he is aware (of it being interest), is more severe than thirty three counts of adultery” (Mishkaatul – Masaabeeh, 2825)
It is clear from the above that interest is haraam (forbidden).
One should always keep in mind that following the Shariah comes with barakah. Violating the Shariah, incurs the wrath of Allah (Subhanahu wa Ta’ala) which is exemplified in various aspects of a person’s life.
Should you wish to renovate your house, we advise you to search for Islamic Finance alternatives within your country. Alternatively you may procure a private investor to fund the renovation and receive a fixed profit for a fixed term. We advise you to contact the Darul Iftaa in Karachi to advise you further.
And Allah Ta’āla Knows Best
Mufti Ismail Desai,
Darul Iftaa
Checked and Approved,
Mufti Ebrahim Desai.