My father was supposed to pay Rs. 5000 to his friend in 1995, but he did not pay this amount till now. It has been 17 years now and friend who is also a Muslim is asking us to pay an amount which would match current value. As any fixed interest is haram in Islam, would like to know what calculation formula should be used to arrive the recent value of Rs. 5000 of 1995.
Answer:
(Fatwa: 434/434/M=1434)
If your father took 5000 as loan then he will have to pay only the same amount. It is not correct to demand more amount as per the current value, it shall become interest. Yes, if there is no condition of excess and your father gives more than the loan amount, then it is alright.
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta,
Darul Uloom Deoband