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A Loan’s Contract shouldn’t be Conditioned with an Increase on its Value

Answered according to Shafi'i Fiqh by Darul Iftaa Jordan
A nurse wishes to purchase a flat through one of the Islamic banks where her union pays fifteen thousand JDs. In the name of the bank as a down payment, so as for the deal to be completed. Is it permissible for the union to write the cheque in the name of the bank which is going to buy the flat from its owner ?

Answer:
All perfect praise be to Allah. Blessings and peace be upon Prophet Mohammad: The sum which will be paid by the union to the bank is a loan given on behalf of the certified nurse as a down payment conditioned by the bank. This act is permissible in Sharia and the union`s administration is rewarded for it, provided that no increase on the loan`s value is stipulated upon settlement because the increase is from Riba(usury). Allah, The Almighty, says in this regard: “ But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.”{Al-Baqarah/279}. And Allah knows best.

This answer was collected from the official government Iftaa Department of Jordan.

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