Is it allowed to give scholarship to needy student by interest money?

Answered according to Hanafi Fiqh by
Is it allowed to give scholarship to needy students by collecting the amount from alumni of a university and submitting it to the bank. The principal amount will return interest annually, which we want to distribute among financially needy students. For e.g. if we collect 1 lakh INR and make a Fixed Deposit of 1 lakh in a bank we received 8 thousand annually (8% interest on 1 lakh), which we will give to a needy student. Is it allowed ? Please suggest.

بسم الله الرحمن الرحيم

(Fatwa: 130/233/B=3/1438)

Neither it is lawful to do so only for receiving interest amount and distributing it among the poor and needy students nor you are assigned to do it i.e. it is not lawful to do so for receiving eight thousand rupees on fixed deposit of one lakh.

Allah knows Best!

Darul Ifta,
Darul Uloom Deoband