I, Mr XXX borrow USD10000 from Mr XX. I promise to pay back his money within three months. I give Mr XX a precious stone as a guarantee. If I cannot pay back the money on time, the precious stone will be at Mr XX’s disposal.
Now three months have passed, this non Muslim guy couldn’t pay back the money. So what should the Muslim brother do to the precious stone? Can he sell the stone and keep all the money for himself? But the non Muslim guy only borrowed USD10000 only, the precious stone worth USD100,000. Is the extra USD 90000 a riba?
Ref. No. 1024/41-219
In the name of Allah the most Gracious the most Merciful
The answer to your question is as follows:
The Muslim brother should sell the precious stone received as a guarantee and keep only as much money as the non-Muslim owed to him i.e. 10000 USD only. The rest amount of 90,000 USD must be returned to the non-Muslim brother. The non-Muslim brother is the owner of extra amount of 90,000. So it is forbidden and haram as per Shariah for a Muslim to take extra amount.
And Allah knows best
Darul Uloom Waqf Deoband